Basis is the type of day count basis as it relates to financial equations.
The following is a list of Microsoft Excel financial functions that use a
basis:
ACCRINT() COUPNUM() ODDFPRICE() PRICEDISC()
ACCRINTM() COUPPCD() ODDFYIELD() PRICEMAT()
COUPDAYBS() DISC() ODDLPRICE() RECEIVED()
COUPDAYS() DURATION() ODDLYIELD() YIELD()
COUPDAYSNC() MDURATION() PRICE() YIELDDISC()
COUPNCD()
There are five types of basis in Microsoft Excel, including the European Basis 30/360.
The table below explains all five types of bases with examples for each
type:
Basis Day count basis
------------------------------------
0 or omitted 30/360
1 Actual/Actual
2 Actual/360
3 Actual/365
4 European Form 30/360
: Basis 4 (European Form 30/360) treats the end of February and the thirty-first of a month differently than the 30/360 basis used by the National Security Dealers (NASD) or Securities Industry Association (SIA).
Basis Types
- Basis 0 uses 30 days a month for a total of 360 days a year. The yields of agencies are calculated on this basis. These agencies include government-sponsored organizations that make up a range of federal banks and loan mortgage banks. This method uses 180 days.
- Basis 1 is used by treasuries. The actual number of days is counted. This method takes leap years into account so there could be 365 or 366 days.
- Basis 2 is similar to Basis 1, but only has 360 days per year.
- Basis 3 is similar to Basis 1, but always has 365 days per year.
- Basis 4 is the European method for starting and ending dates that occur on the 31st of the month. For example, if the starting or ending date is the 31st of a month, it then becomes equal to the thirtieth of the same month.