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

[Nicole Seaman]

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.

Don't have the Texas Instruments BA II Plus? Purchase one here:

 

[Guest 61086]

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]

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,

 

[Guest 61086]

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]

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.

 

[isagasta]

Hello, David, Nicole,

Is there a way to set up BA II Plus calculator to perform all bond calculations (price, duration,etc...) and other TVM calculations using continuous compounding by default (and not discrete compunding)?

I am specifically thinking about duration calculation which is very easily calculated using the 'BOND' function, but it gives the result using discrete compounding and not continuous, which is the requirement under FRM.

Many thanks,
Ignacio.

 

[David Harper CFA FRM]

Hi @isagasta Right, good point, but to my knowledge the BA II+ bond worksheet (and the calculator's TVM) and inherently, necessarily discrete such that translation to/from continuous is necessarily a manual affair .... I totally understand your want of such functionality but I don't think it's there ... Thanks,

 

[Detective]

I am not a fan of the approved calculators either, but theoretically if it’s taking an input of number of compounds, can’t you input in a really large value to approximate continuous? Not that I’d recommend this approach seeing it as probably much easier to work with ln and e.

 

[David Harper CFA FRM]

@Detective that's clever, and sure a high compound frequency will approximation continuous, but I feel like that would be an bad habit to get into, seems much better to get comfortable with ln(.) and exp(.) and translations back/forth from/to discrete, if only b/c continuous compounding can be really convenient in many situations; e.g., extracting forward rates.

 

[nabtfrm]

The calculator settings/tips are so useful and time-saving! Wish there are more tutorials like these
Thank you!

 

[Eustice_Langham]

Hi, re the Texas Instruments BA II calculator, when setting up the calculator, what is the preferred setting for the 2nd Func, P/Y and C/Y settings? I ask because I have been trying to perform a very simple bond calculation but am getting no where near the expected result. Upon checking my calculator was set to P/Y = 12 and C/Y = 12...when the bond in question was a semi annual bond ie with N = 20.

Am I right to ensure that the settings for both P/Y and C/Y should be kept at 2, so that when performing say bond calcs I only make the adjustment to N, I/Y, PV, PMT? Thanks

 

[David Harper CFA FRM]

HI @Eustice_Langham I moved your post to this thread attached to my above video that addresses the recommended P/Y and C/Y settings (starting at about 12:40 min ... ) and also see prior discussion above. My strong preference is to leave P/Y = C/Y = 1 as discussed above

 

[Eustice_Langham]

Thanks David, I dont know why but my calculator had reverted to 12 for each C/Y and P/Y....resulting in some very strange answers.

 

[ARaza]

Thankyou David Sir, the video is really helpful.

Keep posting Sir...,

 

[Harry Kalaitzoglou]

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.

View attachment 2257


Don't have the Texas Instruments BA II Plus? Purchase one here:

View attachment 2251

Fantastic introduction to the calculator.

 

[lisalusk]

Another important setting is the date format. In Android app development, working with dates is a common occurrence. By configuring the calculator's date format to match your preferred style (e.g., MM/DD/YYYY or DD/MM/YYYY), you can seamlessly integrate calculations involving dates into your programming workflow.
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