• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL

Chapter 12. Financial Functions > Understanding the Financial Jargon

12.1. Understanding the Financial Jargon

If you are like me, your day-to-day activities probably don't revolve around financial transactions other than withdrawing money from the ATM and balancing your checkbook. So when you start hearing terms such as annuities, yield, or securities, it is easy to get that glazed-over look in your eyes. However, by understanding some basic financial terms, you will better understand the functions described in this chapter and how to use them to get the desired results.


A type of investment that guarantees a specific return. The payments are either at specific times or in a single lump sum. Annuities are sold by financial institutions and insurance companies. There are two types of annuities: fixed and variable.

Fixed Annuities

Have a guaranteed rate of interest that is paid over several years.

Variable Annuities

Investments in fund-like portfolios where the return on the annuity is based on the performance of the portfolio you select. You are also typically charged annual fees with a variable annuity.

Cash Flow

Used to refer to money coming in or going out. If the money is coming in (earned) it is referred to as positive cash flow. Money that is going out (spent) is negative cash flow.


The portion of a statement or a page from a coupon book that is sent in when a payment is due. Many of the functions in this chapter refer to the coupon date, which is basically just the date that a payment is due.

Day Count Basis

Indicates how days in a month and days in a year are counted when performing calculations. For example, although we all know that all years (except for leap years) have 365 days and each month has either 30 or 31 days (except for February); the 30/360 Day Count Basis assumes each month has exactly 30 days and a year has 360 days. By using this type of calculation, the interest paid can be calculated as the same amount each month.

There are five different Day Count Basis methods available within Excel. They can be selected for the Basis argument with several functions outlined in this chapter by specifying a value between 0-4, as outlined in Table 12-1.



Not a subscriber?

Start A Free Trial

  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint