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4.7 Financial Functions
Financial Functions perform common financial
calculations, such as calculating the future value of an
annuity at a given interest rate, straight-line
depreciation, double-declining depreciation, or the
payment term for a given investment. The financial
functions in SpreadScript cover annuities, cash flows, assets.
bonds, and Treasury Bills.
Financial functions are most useful for solving cash flow
calculations where you know all but one variable. For
example, if you know the present value of an investment,
interest rate, and periodic payment, you can use the FV
function to calculate the future value of the investment.
If you know the future value and other variables, but
need to know the present value, you can use the PV
function.
Many financial functions require specifying a Day Count
Basis. A Day Count Basis indicates the way in which the
days in a month and the days in a year are to be counted.
Most of the financial functions in securities involve 4
different Day Count Basis: 30/360, actual/actual,
actual/360 and actual/365.
30/360 Day Count Basis assumes 30-day months and 360-day
years (12 months x 30 days). SpreadScript also follows the
``End-of-Month'' rule which assumes that a security pays
interest on the last day of the month and will always
make its interest on the last day of the month. Special
rules are followed when calculating the days between two
dates on 30/360 Day Count Basis.
For example, let Start_Date = D1/M1/Y1, End_Date = D2/M2/Y2.
- If D1=31, SpreadScript uses 30 for D1.
- If D2=31, SpreadScript uses 31, unless D1=30 or D1=31. In
this case, SpreadScript uses 30.
- If D1 is the last day of Feburary (D1=28 or 29 in a
leap year), SpreadScript uses 30 for D1.
- If D2 is the last day of Feburary (D2=28 or 29 in a
leap year) and D1 is also the last day of Feburary,
SpreadScript uses 30 for D2.
The special arguments used by SpreadScript financial functions are
defined in Table 4.1
Financial functions use the arguments defined in Table
Table 4.1:
Arguments used in Financial Functions
interest rate |
The interest rate to be used in the
calculations. The rate may be specified
as annual, monthly or quarterly, but it
must agree with the increment you use for
periods. By default the interest rate is
an annual rate. |
present value |
The present value of an investment,
representing the amount already received
from or committed to an investment. |
period |
The number of periods over which the loan,
investment or depreciation is to be
calculated. The periods may be defined in
months, quarters or years, but must agree
with the increment used to define interest
rate. |
future value |
The future value of an investment, given a
certain present value, interest rate, and
number of periods. |
cost |
The original cost of a depreciable capital
asset. |
salvage value |
The remaining value of a capital asset
after the depreciation period has expired. |
allowable life |
The allowable life of a depreciable item. |
yield |
The interest rate that will make the
present value of the expected future cash
flows equal to the price of the financial
instrument. |
price |
The present value of the expected future
cash flows where the discount rate is
equal to the yield of the financial
instrument. |
coupon rate |
The annual coupon rate of a security. |
frequency |
The number of coupon payments in a year. |
basis |
The day count basis to be used in
calculation. |
|
Functions related fixed income securities usually require
special dates as arguments: issue date, settlement date,
first coupon date, last coupon date, maturity date of a
security. When specified, the following constraints
should be followed:
issue >
settlement >
maturity
issue >
first coupon >
maturity
issue >
last coupon >
maturity
Next: 4.8 Date and Time
Up: 4. Built-in Functions
Previous: 4.6 Digital Logic Functions
  Contents
  Index
SpreadScript User's Guide, Version 1.2
Grey Trout Software
02 March 2003