Time value of money and financial calculator tutorials
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Time value of money and financial calculator tutorials
Strictly speaking, an annuity is a series of equal cash flows, equally spaced in time. However, a graduated annuity (also called a growing annuity) is one in which the cash flows are not all the same, instead they are growing at a constant rate (any other series of cash flows is an uneven cash flow stream). So, the two types…
This article explains how to calculate bond duration and convexity using a TI 83 Plus calculator. It highlights the complexity of using traditional formulas and presents an approximation method that involves calculating bond prices at current, slightly higher, and slightly lower yields. This method is accurate to multiple decimal places, simplifying the process. The article provides step-by-step instructions for storing and recalling bond prices, and emphasizes that these calculations can be made on coupon payment dates. It concludes by noting that the approximations are sufficiently accurate for practical use and can be adapted for other dates using dirty prices.
This tutorial explains how to create an amortization schedule for a fixed-rate loan using a TI 83 Plus calculator. The tutorial covers entering loan details into the TVM Solver, calculating monthly payments, and breaking down each payment into interest and principal. It also demonstrates using built-in functions (ΣInt, ΣPrn, and Bal) to automate calculations and create a complete amortization table. The tutorial includes tips for adjusting loan terms and efficiently navigating the amortization schedule. For those preferring spreadsheets, a separate tutorial is recommended.
In recent years, bond issuers have changed from the traditional call schedule to a “make-whole” type of call. Generally, this is good for investors as it makes it less likely that high interest bonds will be called. If it is called, then they are “made whole” because they are paid the present value of the remaining cash flows. In a…
One of the key variables in choosing any investment is the expected rate of return. We try to find assets that have the best combination of risk and return. In this section we will see how to calculate the rate of return on a bond investment. If you are comfortable using the TVM Solver, then this will be a simple…
A bond is a debt instrument, usually tradable, that represents a debt owed by the issuer to the owner of the bond. Most commonly, bonds are promises to pay a fixed rate of interest for a number of years, and then to repay the principal on the maturity date. In the U.S. bonds typically pay interest every six months (semi-annually),…