Daily DAX : Day 167 ODDFYIELD

 The ODDFYIELD function in Power BI's Data Analysis Expressions (DAX) language is used to calculate the yield of a security that has an odd (irregular) first period. This is particularly useful in financial analysis when dealing with bonds or other fixed-income securities that don’t follow a standard coupon payment schedule for their first interest period.

Syntax

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

Parameters:

    settlement: The date when the security is purchased (settlement date).

    maturity: The date when the security expires (maturity date).

    issue: The date when the security was issued.

    first_coupon: The date of the first coupon payment after the settlement date.

    rate: The security’s annual coupon rate (interest rate).

    pr: The price of the security per $100 face value.

    redemption: The redemption value of the security per $100 face value (typically 100 if redeemed at par).

    frequency: The number of coupon payments per year (1 = annual, 2 = semi-annual, 4 = quarterly).

    [basis] (optional): The day-count convention to use (e.g., 0 = US 30/360, 1 = Actual/Actual). Defaults to 0 if omitted.

Return Value

The function returns the yield as a decimal (e.g., 0.05 for 5%).

How It Works

The ODDFYIELD function is designed for securities with an irregular first coupon period—meaning the time between the issue date and the first coupon payment is either shorter or longer than the standard coupon period. This irregularity affects the yield calculation, and ODDFYIELD adjusts for it by considering the odd period in its computation. It uses an iterative process to determine the yield that equates the present value of the security’s cash flows to its price.

Use Case

Imagine you’re analyzing a bond issued on January 1, 2023, with a maturity date of January 1, 2033, and semi-annual coupon payments. However, the bond was purchased (settled) on March 1, 2023, and the first coupon payment occurs on July 1, 2023. This creates an odd first period (March 1 to July 1) that doesn’t align with the regular 6-month coupon schedule. You’d use ODDFYIELD to calculate the yield based on the bond’s price, coupon rate, and these irregular dates.

Example

Suppose:

    Settlement date: March 1, 2023

    Maturity date: January 1, 2033

    Issue date: January 1, 2023

    First coupon date: July 1, 2023

    Coupon rate: 5% (0.05)

    Price: $98 per $100 face value

    Redemption value: $100

    Frequency: 2 (semi-annual)

    Basis: 0 (US 30/360)

In DAX, you could write:

Yield = ODDFYIELD(DATE(2023, 3, 1), DATE(2033, 1, 1), DATE(2023, 1, 1), DATE(2023, 7, 1), 0.05, 98, 100, 2, 0)

This would return the yield (e.g., approximately 0.053 or 5.3%), accounting for the odd first period.

Practical Application

    Financial Analysts: Use ODDFYIELD to evaluate bonds with non-standard first coupon periods, ensuring accurate yield calculations for investment decisions.

    Portfolio Management: Helps in comparing yields across securities with varying issuance and settlement timelines.

    Risk Assessment: Provides insight into the effective return of a bond, factoring in its unique payment structure.

In summary, ODDFYIELD is a specialized tool for handling the complexity of irregular first coupon periods in fixed-income securities, making it invaluable for precise financial modeling in Power BI.