DAX

Dax Function: DISC

Category: Financial Functions

The DISC function in Power BI calculates the discount rate for a security or investment that does not pay periodic interest, given the settlement date, maturity date, price, and redemption value. It is commonly used in financial modeling for fixed-income securities like Treasury bills.

Purpose

The DISC function determines the annualized discount rate, enabling users to compare the value of non-interest-bearing securities.
Helps in assessing short-term investments like bonds or treasury bills, where the discounted purchase price and future value are critical.

Type of Calculations

Computes the rate of discount as a percentage using the difference between the par (redemption) value and the purchase price.
Annualizes the discount based on the actual number of days in the investment period.

Practical Use Cases

Financial Analysis: To evaluate the return on short-term fixed-income securities.
Portfolio Management: Compare investment opportunities based on their discount rates.
Bond Trading: Assess the cost-effectiveness of trading zero-coupon bonds or T-bills.


DISC(settlement, maturity, price, redemption, basis)

Parameter	Type	Description
`settlement`	Scalar	The settlement date of the security (date when the buyer acquires the security).
`maturity`	Scalar	The maturity date of the security (date when the principal is paid).
`price`	Scalar	The purchase price of the security (expressed as a percentage of the face value).
`redemption`	Scalar	The redemption value of the security (face value or par value received at maturity).
`basis`	Scalar	The day count basis to use for calculations (0 = US 30/360, 1 = Actual/Actual, etc.).

How Does DISC Dax Function Works

The DISC function calculates the discount rate as:
Where:
- Redemption - Price: The difference between the par value and the purchase price.
- Year Fraction: Number of days between settlement and maturity, annualized using the specified basis.
Day Count Basis
The basis parameter specifies the convention for calculating the number of days in a year:
- 0: US 30/360 (default)
- 1: Actual/Actual
- 2: Actual/360
- 3: Actual/365
- 4: European 30/360

What Does It Return?

Returns the discount rate as a decimal (e.g., 0.05 for 5%).
The value represents the annualized discount rate for the specified security.

When Should We Use It?

For analyzing short-term securities with a clear settlement and maturity date.
When comparing securities with different day count conventions.
To calculate returns on zero-coupon bonds and other instruments that don’t pay interest.

Examples

Basic Usage :

Calculate the discount rate for a T-bill with:

Settlement date: January 1, 2025
Maturity date: July 1, 2025
Price: $97
Redemption: $100
Basis: US 30/360


DISC(DATE(2025,1,1), DATE(2025,7,1), 97, 100, 0)

Returns: 0.0612 (6.12%)

Different Basis

For the same security, calculate using the Actual/Actual basis:


DISC(DATE(2025,1,1), DATE(2025,7,1), 97, 100, 1)

Returns: 0.0618 (6.18%)

Column Usage

Apply the DISC function to a table of securities:


DiscountRate =
DISC(
Securities[Settlement],
Securities[Maturity],
Securities[Price],
Securities[Redemption],
0
)

Tips and Tricks

Ensure settlement and maturity are valid dates and that maturity > settlement.
Use consistent day count bases across securities for accurate comparisons.
If price >= redemption, the function may return unexpected results (negative or zero discount rate).
Use the correct basis value for your specific financial analysis needs.

Performance Impact of DISC DAX Function:

Handles calculations efficiently for small to medium datasets.
For large datasets, pre-aggregate security attributes to improve performance.

Related Functions You Might Need

Function	Description
`YIELD`	Calculates the yield on a security that pays periodic interest.
`PRICEDISC`	Determines the price of a discounted security based on its discount rate.
`TBILLEQ`	Calculates the equivalent bond yield for a Treasury bill.
`TBILLPRICE`	Calculates the price of a Treasury bill.

Want to Learn More?
For more information, check out the official Microsoft documentation for DISC You can also experiment with this function in your Power BI reports to explore its capabilities.

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1. What does the DISC function calculate?

The DISC function calculates the annualized discount rate for a security, based on its settlement date, maturity date, price, and redemption value.

2. What is the difference between DISC and YIELD?

The DISC function focuses on non-interest-bearing securities, while YIELD calculates the rate of return for securities with periodic interest payments.

3. Can I use the DISC function for securities with a price higher than redemption?

No, the DISC function assumes the price is lower than the redemption value. For bonds trading at a premium, use other functions like YIELD.

4. How do I handle day count conventions in the DISC function?

Use the basis parameter to specify the day count convention, such as 30/360, Actual/Actual, or others.

5. What happens if the settlement date equals the maturity date?

The function will return an error or invalid result, as the calculation requires a positive difference between settlement and maturity dates.

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