This is because you do not enter any valuation date input argument. Without a valuation date the input arguments 734489, 733040 are not treated as date strings but as periodic units.
Using Componding =365 (daily) and Compounding=-1 (continuous) leads to similar results. This is the case if you use a valuation date (assumed equal to the start date).
When I execute the following:
r=disc2rate(365, 0.851746813, 734489, 733040,733040)
I receive:
r =
4.0423e-002
When I execute the following:
r=disc2rate(-1, 0.851746813, 734489, 733040,733040)
I receive:
r =
4.0450e-002
Both values are near 4%.
However, if I do not specify a valuation date, the result I receive is completely different:
r=disc2rate(-1, 0.851746813, 734489, 733040)
r =
1.1074e-004
Entering a ValuationDate invokes the date interpretation; omitting a valuationDate invokes the default time interpretations.
