MS Excel: ODDFYIELD function to calculate annual yield

ODDFYIELD stands for "Odd First Period Yield". It calculates the annual yield of a bond when the first period is shorter or longer than the standard schedule.

In simple terms:If a bond doesn’t start on a "perfect" calendar (like paying every 6 months neatly), ODDFYIELD helps you figure out what your real return (yield) is.

✅ Regular bonds ➔ Use YIELD

✅ Bonds with odd first periods ➔ Use ODDFYIELD

Incomplete or extended first periods impact how much interest you really earn.If you don't adjust for this, you’ll overestimate or underestimate your true return — which can cost you real money.

Syntax

ODDFYIELD(settlement, maturity, issue, first_coupon, rate, pr, redemption, frequency, [basis])

Argument	Description
settlement	Date you buy the bond.
maturity	Date when the bond matures (you get back your principal).
issue	Issue date (when bond was first issued).
first_coupon	First coupon payment date.
rate	Annual coupon rate (interest paid).
pr	Price per $100 face value.
redemption	Redemption value (usually 100).
frequency	Interest payment frequency (1 = annual, 2 = semi-annual, 4 = quarterly).
basis	[Optional] Day count basis (US 30/360, Actual/Actual, etc.).

Real-World Scenario

Imagine:

• You buy a bond on March 1, 2025.

• Bond matures on March 1, 2030.

• Issued on January 1, 2025.

• First coupon on July 1, 2025.

• Coupon rate = 5%.

• Purchase price = $98 (per $100).

• Redemption value = $100.

• Semi-annual payments (2).

Excel Formula:

=ODDFYIELD(DATE(2025,3,1), DATE(2030,3,1), DATE(2025,1,1), DATE(2025,7,1), 5%, 98, 100, 2)

Result: Excel returns something like 5.3% annual yield.

Meaning: Even though the coupon says "5%", because of the bond's price and odd period, you actually earn 5.3%!

Unique Real-World ODDFYIELD Examples

Scenario	Formula	Meaning
Short first period	=ODDFYIELD(DATE(2025,5,1), DATE(2030,5,1), DATE(2025,2,1), DATE(2025,8,1), 4%, 99, 100, 2)	Higher yield than coupon
Long first period	=ODDFYIELD(DATE(2025,5,1), DATE(2030,5,1), DATE(2024,11,1), DATE(2025,8,1), 4%, 101, 100, 2)	Lower yield due to higher price

Key Secrets to Mastering ODDFYIELD

Tip	Why It Matters
Double-check settlement, issue, and first coupon dates	Wrong order ➔ wrong yield
Understand price vs. redemption value	Big discounts or premiums affect real yield
Always know the frequency	Most US bonds = 2 (semi-annual)
Use correct day-count basis	Affects small but important differences in yield

ODDFYIELD vs YIELD:

Feature	YIELD	ODDFYIELD
Regular periods	✅	❌
Odd first period handling	❌	✅
Simpler to use	✅	Slightly more complex
Real-world precision	Good	Best

Summary

Feature	Details
Purpose	Calculate bond's annual yield with odd first period
When to use	Bonds with non-standard first payment dates
Important Inputs	Price, Issue Date, First Coupon Date
Caution	Date errors = massive mistakes

In finance, small details create big differences.If you don’t account for an odd first period, your investment returns may look better on paper than they actually are.

✅ ODDFYIELD shows the true, risk-adjusted, market-reflecting yield — not just the shiny coupon rate.

✅ If you know ODDFYIELD, you’re thinking like a Wall Street pro, not a hobbyist.