Help on HP12C calculator for cost of debt - bond calc.

CFA Level I
#1

hi all, i need help on using this particular calculation based on example 4, page 46 in volume 4 cfai text: it’s calculating and solving for the cost of debt (i) for semi-annual coupon bond. I cannot seem to get the answer from the HP12C calculator right. can anyone help me please??

#2

What numbers do you plug into your calculator, and where?

#3

that’s the trouble - i’m not sure which numbers are for which ones. I tried FV for FV, PV for PV, PMT for CHS + PMT (to change sign) and n for N. tried pressing i to get the cost of debt, but i got error.

#4

Try pressing the NOROM key.

#5

oh BTW, i’m using ALG mode. what’s NOROM? will go find out

#6

That’s fourCastles playing with you giving you MORON, in reverse. believe me there is no such key. I believe you have to use the i key to find out the interest rate. either with the blue key or without. I am not a HP-12c calculator user, prefer the TI-BA IIPlus Platinum myself. CP

#7

not much help there. anyone please help??

#8

why don’t you post the question, then an HP12 user can walk you through the key punches

#9

Try the user guide: http://h10025.www1.hp.com/ewfrf/wc/manualCategory?product=81575&cc=us&lc=en&dest_page=product&dlc=en&

#10

i’ve been through the user-guide (one provided) but doesn’t help. Anyone here uses HP12C and know how to calculate cost of debt for bond? seems like HP12C cannot accept number of periods but rather uses actual calendar. will post the question from the CFAI text. It’s example 4, PAGE 46 in volume 4 of the text anyway.

#11

even the TI BA II Plus accepts actual calendar only. We enter StartDt 01-01-2000 CPN = 8% RetirementDt = 01-01-2010 RV=100 ACT 2/Y for Semiannual payment PRC = 110 (for 110% of Price) Calculate Yield: 6.617%

#12
  1. Key in the program. 2. If the C status indicator is not displayed, press STO EEX 3. Key in the annual coupon interest rate as a percentage then press STO 2. 4. Key in the settlement date (MM.DDYYYY)* then press STO 3. 5. Key in the maturity date (MM.DDYYYY)* then press STO 4. 6. Key in the redemption value as a percentage of par then press STO 5. 7. If price is desired: a. Key in the desired yield to maturity as a percentage then press STO 0. b. Press t to calculate price as a percentage of par value. c. RPN: Press X~Y to display accrued interest due the seller. Press + to calculate the total price paid. c. ALG: Press +X~Y to display accrued interest due the seller and then press = to calculate the total price paid. For a new case return to step 3. Note that only those values which have been changed need to be reentered and stored. 8. If yield is desired: a. Press STO 0. b. Key in the price as a percentage of par value and press STO 1. c. Press R/S to compute annual yield to maturity. For a new case return to step 3. Note that only those values which have been changed need to be reentered and stored. This is on page 217 of the manual found online http://h10032.www1.hp.com/ctg/Manual/bpia5184.pdf
#13

You could also arrive at the YTM for a bond the traditional way StartDt 01-01-2000 CPN = 8% RetirementDt = 01-01-2010 RV=100 ACT 2/Y for Semiannual payment PRC = 110 (for 110% of Price) Calculate Yield: 6.617% instead of this N=20 PMT=4 PV=-110 FV=100 CPT I/Y = 3.308 Since this is semiannual as set up – 3.308 * 2 = 6.617% So you actually do not need the Bond functions to calculate the YTM for the bond. CP