Excel: INTRATE() Function Uses Simple Interest |
The information in this article applies to:
- Microsoft Excel for Windows, versions 4.0, 4.0a, 5.0, 5.0c
- Microsoft Excel for the Macintosh, versions 4.0, 5.0, 5.0a
SUMMARY
In Microsoft Excel, the INTRATE() function returns the interest rate for a fully invested security. This function uses simple interest rather than compound interest to compute the interest rate.
MORE INFORMATION
The INTRATE() function has a special use for fully invested securities. The interest rate returned is prorated (or inversely prorated) to the number of days between redemption and settlement.
This function cannot be modified to take into account compounding interest. To compute compound interest we have to know the settlement, the redemption, the first payment day and the frequency of payments. Compounding between two dates does not make sense without this additional information.
INTRATE() estimates an average rate over the period of time. You can use NOMINAL() to approximate the rate without knowing the number of periods between the two dates.
REFERENCES
Online Help, version 5.0, INTRATE function "Function Reference," version 4.0, pages 245-246, 286-287
For more information about the INTRATE function, choose the Search button in Microsoft Excel Help and type:
INTRATE function
Additional query words: 7.00 5.0 Analysis Financial
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Last Reviewed: March 29, 1999 |