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But in Excel 2010, it does not work in the conditional formatting formula as it returns something like "cannot use array in conditional formatting formula".
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Yes, you're right. To work around that you have to use a name. Go to formulas tab > define name. Create a name called Instructors (or whatever you want to call it) which refers to ={"teacher","tutor"}
Then your conditional formatting rule becomes:
=COUNT(SEARCH(Instructors,$A1))=0
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Ques 2:
In Column B, I want to know why Cell B2 returns a value error but B4 doesn't? Indeed, I think B2 shouldn't have returned a value error.
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In the workbook you attached these cells just have #VALUE! errors - no formulas. So I can't see the original formula / answer this question.