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In the realm of stocks, before investing in any type of stock, it's essential to thoroughly understand the development trends of the company. Also, consider calculating the potential return on investment for that stock. This article provides a detailed guide on using the Intrate function to calculate interest on stocks you've invested in.
Intrate Function
Description: This function returns the interest rate of the invested stock (calculates the percentage value).
Syntax: INTRATE(settlement, maturity, investment, redemption, [basis]).
Where:
- settlement: Is the securities settlement date (this is a required parameter). The settlement date is defined as the day after the securities issuance date when the securities are traded or sold to others.
- maturity: Is the maturity date of the securities, also known as the expiration date, which is a required parameter.
- investment: Total amount invested in securities, a required parameter.
- redemption: Total amount received when securities mature, a required parameter.
- basis: Determines the day-count basis (optional, defaults to a basis value of 0 if not entered). Basis can have the following values:
+ Basis = 0 => Day-count basis according to the US standard (NASD) 1 month 30 days/year 360 days.
+ Basis = 1 => Actual days in the month/ Actual days in the year.
+ Basis = 2 => Actual days in the month/ 360 days in the year.
+ Basis = 3 => Actual days in the month/ 365 days in the year.
+ Basis = 4 => According to the European standard, the number of days in a month is 30 days/ the number of days in the year is 360 days.
Calculation Formula:
INTRATE Function = (redemption – investment) / investment *(ND/DY).
Where:
- ND: Number of days in the year depending on the day-count basis.
- TN: Total number of days calculated from the settlement date to the maturity date of the securities.
Example:
Calculate whether investing in this stock is profitable with the following parameters:
To determine if the investment in this stock is profitable, calculate the value of the INTRATE function. If the returned value is positive, the investment is profitable; otherwise, the investment is not effective.
Calculate the interest rate for this stock. Enter the following formula: INTRATE(D5,D6,D7,D8).
Result:
The value of the Intrate function is 9.1% => Investing in this stock is profitable, with a 9.1% interest rate return on the investment.
So, this article introduces you to how to calculate stock interest rates. We hope you always make careful calculations and choose the type of stock that brings the highest benefits.
Wishing you all the best success!
