Calculators for FRM

[karunk]

All.. I have registered for my FRM Level 1 exams in November. I think I am doing decent enough in getting an understanding of the concepts with the help of BT videos. Thanks to BT for that.

Once I complete a revision of the concepts, (mostly using BT Videos), I would start practising questions. I am in Market Risk IT, and I dont use calculators much in my job. I just want to understand how complicated calculations are in FRM. I am happy to use it to find logs/ x^y, and basic arithmetics. But I havent used it for anything more than that.

I learn from a colleague who is doing his PRM that, they have only basic calculations in PRM. So I am just curious to know, if I must pick up any additional CALCULATOR SKILLS.

Kindly advise!!

Regards,
Arun

 

[David Harper CFA FRM]

Hi Arun,

FRM is similar to PRM in regard to calculator: you will only require basic operations. That is, in addition to add/subtract/multiply/divide, this includes:
LN() and EXP()
Power (x^y) and roots; e.g., SQRT(), and
The five time value of money (TVM) keys because they map to bond functions:
N = number of periods, I/Y = yield, PV = price, PMT = coupon, FV = face

So you want to be able to solve for price, e.g.,
What is price of 30-year 4% semiannual coupon bond with 4% yield?
N=60, I/Y=2, PMT=3,FV=100, and CPT I/Y = $134.76

… or, what is yield of $100 face 6% semi-annual coupon with price of $96?
N=60, PV = -96, PMT=3, FV =100 and CPT I/Y = 3.15 * 2 = 6.3%

Hope that helps (thank for liking the videos) - David

 

[karunk]

Thats helpful David. Thanks for the quick response!!