Notes Regarding the use of Microsoft Excel in the world of Finance and Investment Management

Excel Formatting Rules Numbers greater than 999 should be Use a for all numbers containing decimals. If any currency values on a spreadsheet display cents (more than 0 cents), then all currency values on a spreadsheet should be formatted to display 2 decimal places. R . Centering is sometimes ok. Never left-align columns of numbers. Labels should be that they describe. Move the label so that it is directly over the numbers it describes. NEVER move the numbers so that they are under the label. Currency values need to display with a $ sign using the style (and not which happens when you click the $ sign button). Create formulas using cell references whenever possible. Don’t hard-code your formulas using real numbers. Creating formulas using cell references lets you create the interactive formula, so that when you change the contents of one cell, the formula result will automatically adjust itself.

Relative vs Absolute vs Mixed Cell References If a cell, column or row is common to several formulas, you can $A$1 or $A1 or A$1 Parenthesis are used to specify that you want to It is best not to type in your Excel functions straight from the keyboard (unless you know EXACTLY what is required and how it should be entered. It is best to use the Function Wizard to insert Excel functions.

Excel Functions PMT: Used to calculate the periodic payment on a loan (car loan, home loan) Most payments are made monthly. PMT function requires three arguments Interest rate per period (annual rate divided by 12 for monthly rate) NPER: number of payment periods (# of yrs * 12 months/year) Amount of the loan (entered into the function as a negative number so your function result ends up positive)

Excel Functions The IF function is used in spreadsheet decision making, and it requires 3 arguments. The condition being tested for (the cell and the actual test) What to do if the condition is true What to do if the condition is false It yields one result if the condition is true, and a different result if the condition is false.

The VLOOKUP function determines where within a specified table, a value (either numeric or text) is found, and then it retrieves a entry from the table that corresponds to the value, and it requires 3 arguments. The value to be looked up The table range where that value can be found The column containing the corresponding value. Entered as a number (2,3, etc.) in your function When creating the table used by your VLOOKUP, the table value breakpoints (in the first column) should be arranged in alphabetical order or low number to high number order.