Day Count Basis in Excel

**RICH09** · 06-06-2011, 01:05 PM

Hi, could anyone please advise how the day count basis works in excel? I have an example and use PRICE() funtion. Strangely, I can't replicate by choosing day count basis=2 (act/360) and 3 (act/365) and when you look into act/360, the price even returns more than 100.

=PRICE("2012/12/22","2012/12/24",0,0.1,100,2,2)

ps. btw, i have checked HELP file and seems not matching. Thanks

**Colin Legg** · 06-06-2011, 01:18 PM

Hi Rich,

The A stands for "Actual", meaning the actual number of days in a year. So for non leap years, A = 365. If you use A/360 then that will become 365/360.

30/360 assumes all months have 30 days, with a 360 day year. The difference between the European/American methods relates to the adjustments made when the start/end date dates fall on 31st of a month.

**Colin Legg** · 06-06-2011, 01:34 PM

Cross-posted at MrExcel
http://www.mrexcel.com/forum/showthread.php?t=555227

See rule 8:
http://www.excelforum.com/forum-rule...rum-rules.html

**RICH09** · 06-06-2011, 10:43 PM

Originally Posted by Colin Legg

Hi Rich,

The A stands for "Actual", meaning the actual number of days in a year. So for non leap years, A = 365. If you use A/360 then that will become 365/360.

30/360 assumes all months have 30 days, with a 360 day year. The difference between the European/American methods relates to the adjustments made when the start/end date dates fall on 31st of a month.

Thanks Colin,

Thanks for your explanation. But I wonder how come the price is calculated more than 100. The day count basis is to be discount factor. How a price 100/ discount factor >100 if yield >0%? Thanks.