Calculator Advice

Read the manual. Do the examples. They LET you bring in an approved calculator to the exam. It will be your only friend during the exam. XOXOXOXOXOXO Unka Breddie


Yes, I recommend bringing a calculator into the exam as well.

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as a reminder,

also, double check and make sure the calculator is in the appropriate BEG or END mode. it would suck to have the wrong answer for the annuity calculation because you forgot to change it back to END mode between problems.


Only psychopaths use the HP. Fact.


To approximate continuous compounding on the TVM worksheet, set C/Y to something extremely high, e.g. 525,600 or 999,999.

To approximate a perpetuity on the TVM worksheet, set N as something extremely high, e.g. 100,000.


Linear interpolation on a BAII

Enter your 2 (x,y) pairs in DATA. Go into the STATS worksheet and select LIN. Arrow thru the variables until you hit X’ or Y’. Enter your given value, arrow to the value you are looking for and CPT.

Example: Given (0,10) and (50,110), interpolate for X=25

2nd DATA
0 X01 ENTER :arrow_down: 10 Y01 ENTER :arrow_down: 50 X02 ENTER :arrow_down: 110 Y02 ENTER
:arrow_down: until you reach X’
:arrow_down: CPT Y’ 60


Calculating equivalent interest rates

Use the ICONV worksheet and make the effective interest rate the “anchor” for any recalculation.

Example: If the nominal rate compounded monthly is 8.7%, what is the equivalent rate compounded daily?

2nd 2 (for the ICONV worksheet)
NOM 8.7 ENTER :arrow_down: :arrow_down: C/Y 12 ENTER :arrow_up: EFF CPT 9.055434578 :arrow_up: C/Y 365 ENTER :arrow_up: :arrow_up: NOM CPT 8.66964357

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not a fan of Reverse Polish Notation (or whatever it’s called)?

agreed, use the BA II+

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Setting P/Y and C/Y

Your calculator allows you to set P/Y and C/Y to match the parameters given in the question. For example, if you have monthly payments and semi-annual compounding, you can set P/Y=12 and C/Y=2. The calculator will do all the drudge calculations for you.

Now I know some of you set P/Y=C/Y=1 and rejig I to fit in the TVM worksheet. As long as you set I correctly, you will get the same answer as if you set P/Y and C/Y to match the frequencies given in the question. Key point: as long as you set I correctly!!

I prefer to think of myself as a sociopath.

Annuities where the payment amount bumps up once or even multiple times

Say you have an annuity that pays $1,000/year for years 1-5 years and then $2,000 for years 6-10. To calculate the PV, you could use any of the following setups in the TVM worksheet ways:

  1. Calculate a 10 year annuity of $2,000 and subtract a 5 year annuity of $1,000/year
  2. Calculate a 5 year annuity of $1,000 and add the 5 year value of $2,000.year discounted by 5 years of interest
  3. Calculate a 10 year annuity of $1,000 and add a 5 year annuity of $1,000/year discounted by 5 years

The above are all algebraically equivalent, but ain’t nobody got time for that!!! Go to the CF worksheet. Set C01=1000, F01=5, C02=2000, F02=5; go to the NPV worksheet, plug in I and compute NPV. Waaaaaaay less keystrokes than with the TVM worksheet.

Variance and standard deviation

If you’re given percentages or weights for the observations, just turn them into whole numbers and plug 'n chug with DATA/STATS!! The (x,y) pairs only let you enter whole numbers for y, where y is the relative frequency of observation X.

E.g X=1 occurs 75.3% of the time, X=3 occurs 24.7% of the time. Enter (1,753) and (3,247) in the DATA worksheet. The STAT worksheet will calculate the mean and standard deviation for you!!!

Actually, learn to use both. The 12C is blazingly fast to calculate once you learn RPN. No contest there. TVM, much faster, too. The for IRR &NPV, use the BAII. The 12C is okay, but if you make a mistake you have to re-enter everything. THE BAII allows you to go back and check your entries and correct them if they’re wrong. It’s well worth learning RPN.

As a reminder to everyone,
the Proctor is required to reset your calculator to default mode.
You need to know how to change the calculator settings.

Here’s a video on how to change from Chn to AOS, and go from 2 to 9 (floating) decimals.

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Macaulay Duration

  1. Calculate the denominator using the TVM worksheet
  2. Enter the values for t*CF in the CF worksheet and set F0x to 1
  3. In the NPV worksheet, calculate the numerator using the current yield
  4. Divide step 3 result by step 1 result

Example: 4 year, 7% coupon, 5% market yield, all annual

Bond price:

N 4 I 5 PMT 7 FV 100 CPT PV -107.091901

Numerator of Macaulay formula

C01 7 ENTER F01 1 C02 14 F02 1 C03 21 F03 1 F04 428
2nd QUIT
NPV worksheet
I 5 CPT NPV 389.622328

Macaulay duration = 389.622328/107.091901 = 3.638

For non-annual compounding and coupons, you would have to adjust rates and cash flows accordingly.