Digital to Analogue Converter
The digital to analogue converter (DAC) converts the digital signal amplitude to an analogue voltage. The most obvious requirements for the DAC are its conversion speed and its resolution. The speed must fulfill the Nyquist requirement, which demands a sample rate of at least twice the bandwidth. As described in the anti aliasing filter section, the practical limits of the filter require a sample rate of about 2.5 times the bandwidth. The resolution of the DAC must satisfy the required signal to noise ratio. Every bit of resolution contributes about 6 dB to the SNR. Therefore the maximum possible SNR of a 14bit DAC is roundabout 84 dBc^{1}, while it is only 60 dBc for a 10bit DAC^{2}. Less obvious parameters of a DAC are its spurious free dynamic range (SFDR) and its total harmonic distortion (THD). SFDR is defined as the difference in dB between the RMS amplitude of the output signal and the peak spurious signal over the specified bandwidth. THD is the ratio of the RMS sum of the first usually six harmonics to the output signal. According to this definition, the SFRD is always a positive value, while the THD is a negative value. As the harmonic spurs are also considered for the SFDR, the THD cannot be better than the SFDR. The absolute value of the THD is usually a few dB below the SFDR. None of these values can be better than the theoretical limit of 6 dB per bit of resolution. The diagram below depicts the SFDR of the AD9764 14bit high speed DAC at a sample rate of 50 MS/s. The theoretical value of 84dBc cannot be achieved under any operating conditions. It can be seen, that the SFDR drops significantly between 1 and 20 MHz, if the DAC is operated at its full scale. When the DAC is operated at reduced output levels of 12 dB of its full scale, then the SFDR becomes more flat over the operating frequencies and above about 3 MHz, its SFDR is even better than at full scale operation. Under that reduced output level, the DAC operates practically as 12bit DAC and around 5 MHz it comes rather close to the theoretical limit of 74 dB. 

SFDR and THD cannot be neglegted in a real system. Don't expect that the purity of the NCO's output signal is better than these values. Consider yourself lucky, if your system confirms the data from the datasheet. 