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YouTube TI BA II+ Calculator: Essential Settings (TIBA - 01)

Nicole Seaman

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This video is for financial exam candidates who have little to no experience with the Texas Instruments BA II+. David provides a list of essential settings that you absolutely need to know and be comfortable with if you are going to sit for a financial exam using this calculator.

Use [2nd] [FORMAT] to access formatting variables, including the number of decimal places to display (9 = floating) and the calculation method (Chain versus algebraic operating system, AOS). For continuous compounding, use the exponential function, [e^x], which is above (as second function) its inverse, the natural log function, [LN]. The third row is the time value of money functions, TVM, which map to bond variables. Please retain defaults P/Y = 1 and C/Y = 1, and practice toggling from annuities due (aka, in advance) to ordinary (in arrears) with [2nd] BGN [2nd] SET.


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#2
I have looked for this answer throughout the threads with no luck, so will need to post.

If using the TI BA 11 plus calculator the P/Y and C/Y settings are quite crucial in ensuring the inputted values ie N, I/Y, PV, PMT and FV are input consistently. That said I have not seen any reference to ensuring the values as input before attempting to calculate one of the values. What I have seen however and this is more or less by default is that the user should leave the settings as is ie P/Y = 1 and C/Y = 1, and make any adjustment to say a semi-annually compounding interest rate in the inputs ie if coupon pays semi-annual at 14% then C/Y should be set to 2. But what I have seen is that the change is being reflected in the inputting of I/Y ie I/Y is set as follows 14.00/2 = 7.00. Which works but if users do this doesnt it make the settings of P/Y and C/Y redundant?

Does anybody else have any thoughts on this and what should be an appropriate setting ie leave the P/Y and C/Y settings to 1 and make whatever changes when inputting the N and I/Y. Thanks
 

David Harper CFA FRM

David Harper CFA FRM
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#3
Hi @Tim_Rogers Per my video, I've never altered the default P/Y = C/Y = 1 settings, nor have I found any application that required me to change them. Perhaps at this point, it's just mostly force of habit, but I'd confuse myself if I changed them. By retaining P/Y = C/Y = 1.0, we operate on single periods and must manually make the adjustment to annualize.

So, just to make up an exam-typical example, if we want the yield of a 6.5 year bond that pays a s.a. 6.0% coupon and has a price of $940.00, then to get the yield (YTM) we peform these steps:

13 [N]
-940 [PV]
30 [PMT]
1000 [FV]
... [CPT] [I/Y] returns 3.5855% but this is a six-month rate since our period is six months (i.e., 6.5 * 2 = 13; 6.0% * $1,000/2 = $30) so we need to annualize into the bond equivalent yield by simply multiplying by 2 such that: 3.5855 * 2 = 7.1710%

Now, sure we could avoid that last step by setting P/Y = 2 and then the steps are the same except we save the last multiliplication:
[2nd] [P/Y] 2 [ENTER] # display confirms P/Y = 2.0 such that we can now do:
13 [N]
-940 [PV]
30 [PMT]
1000 [FV]
[CPT] [I/Y] returns 7.1710 immediately

... but the latter to me isn't worth it: you save only a single step at the end, but you still enter the inputs in their single-period (six month) values. Note that if I wanted to next do a question with monthly or annual compound frequency, I would need to change the P/Y settings. This doesn't seem worth it to me, at all! Unless I a missing some use case?! ... which is possible. But I have yet to come upon a single application where I needed to alter the default P/Y = C/Y = 1. Thanks,
 
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#4
Thanks David, I was beginning to be of the same mind ie to leave the settings as is and make the adjustments via the P, N and I/Y when calculating. I started to make the adjustment to both P/Y and C/Y after seeing a video re its use, but I will now leave as is. Thanks
 

Sixcarbs

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#5
I'd like to add a semi-essential setting. Please tell me if there is already another way to do this on the BA II+.

We constantly need e, 2.718281828. To get that I kept typing, 1, 2nd, e^x. (which is the LN key). Since I got tired of those three keystrokes and thinking in reverse, I stored the number e, 2.718281828 in #0. Now to get e I just type RCL, 0.

It's very nice having it so handy. If there is a better way please let me know. If there is not maybe others might find this useful.
 
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