Formulas > =YIELD()

How To Use YIELD() Function in Google Sheets


Calculates the annual yield of a security paying periodic interest, such as a US Treasury Bond, based on price.

The YIELD formula in Google Sheets is used to calculate the yield of a financial investment. Here are the answers to the questions related to the YIELD formula:

Common questions about the YIELD formula include:
What does the YIELD formula calculate?
How do I use the YIELD formula?
What are the required arguments for the YIELD formula?
What do the different arguments in the YIELD formula represent?
How does the YIELD formula handle different payment frequencies?
Can the YIELD formula handle irregular cash flows?
What are the units or conventions used in the YIELD formula?

The YIELD formula can be used appropriately in the following ways:
Calculating the yield of fixed-income securities: You can use the YIELD formula to determine the yield of bonds, treasury bills, or other fixed-income securities.
Analyzing investment returns: By providing the necessary information such as the security's settlement date, maturity date, coupon rate, and price, you can calculate the yield and evaluate investment returns.
Comparing investment options: You can use the YIELD formula to compare the yields of different investment opportunities and make informed decisions.

The YIELD formula can be commonly mistyped in a few ways, including:
Misspelling the formula name as "YEILD" or "YELD."
Incorrectly using parentheses, quotation marks, or other syntax elements.
Using the wrong order or combination of arguments.

Some common ways the YIELD formula is used inappropriately are:
Using it for non-fixed-income securities: The YIELD formula is specifically designed for fixed-income investments, and using it for other types of investments, such as stocks or real estate, would produce inaccurate results.
Applying it to securities with complex features: The YIELD formula may not accurately calculate the yield for securities with complex features, such as callable bonds or convertible bonds. In such cases, alternative approaches or more advanced financial models may be required.

Common pitfalls when using the YIELD formula include:
Incorrectly inputting the arguments: Providing incorrect values for the settlement date, maturity date, coupon rate, or price can lead to incorrect yield calculations.
Misinterpreting the conventions or units: The YIELD formula relies on specific conventions for factors like day count, compounding, and payment frequencies. Misunderstanding or misinterpreting these conventions can result in inaccurate yield calculations.

Common mistakes when using the YIELD formula are:
Not adjusting for different compounding periods: The YIELD formula assumes compounding periods based on the payment frequency. Failing to adjust the compounding periods correctly can lead to inaccurate yield calculations.
Ignoring the impact of accrued interest: The YIELD formula does not automatically consider accrued interest. If the security has accrued interest, it needs to be added separately to the price.

Common misconceptions people might have with the YIELD formula include:
Assuming it predicts future returns: The YIELD formula calculates the yield based on existing information and does not predict future returns or market movements.
Believing it is the only measure of investment performance: While the YIELD formula provides valuable information about investment returns, it is just one measure among several used to evaluate investment performance. Other metrics like total return or risk-adjusted return should also be considered.

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How To Actually Use YIELD() in Sheets

YIELD(settlement, maturity, rate, price, redemption, frequency, [day_count_convention])

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