Time value of money and financial calculator tutorials
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Time value of money and financial calculator tutorials
In this tutorial we will see how to amortize a fixed-rate loan using the TI BAII Plus calculator from Texas Instruments. Specifically, we will see how to calculate the amount of principal and interest for any particular payment, or range of payments. For example, you may wish to know how much your principal or interest payments will be for the…
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…
Duration and convexity are important numbers in bond portfolio management, but it is far from obvious how to calculate them on the TI BAII Plus. Of course, there are formulas that you can type in (see table below), but they aren’t easy for most people to remember and are tedious to enter. In this article I will show you how…
The article explains the concept of a "make-whole" call provision in bonds, highlighting its benefits for both investors and issuers. Unlike traditional call provisions that offer face value plus a small premium, make-whole calls ensure investors receive the present value of remaining cash flows, calculated using a discount rate tied to a comparable Treasury security. This provision provides issuers flexibility without paying a call premium. The article demonstrates three methods to calculate the make-whole price using a TI BAII Plus financial calculator, ensuring that investors are fairly compensated if the bond is called early.
This article explains how to calculate the expected rate of return on bond investments using the TI BAII Plus financial calculator. It covers three measures: current yield, yield to maturity (YTM), and yield to call (YTC). The tutorial provides step-by-step instructions for calculating these returns, emphasizing the use of the TVM keys and the BOND menu. The purpose is to help readers understand how to evaluate bond returns considering both income and potential capital gains or losses, aiding in making informed investment decisions.
This article explains how to use the TI BAII Plus financial calculator to value bonds, focusing on both coupon payment dates and in-between dates. It covers bond cash flows, typically involving semiannual interest payments and principal repayment at maturity. The tutorial details calculating bond values using the calculator's TVM keys and BOND menu, emphasizing correct data entry for accurate valuations. The purpose is to teach readers how to determine a bond's present value based on expected future cash flows and appropriate discount rates, enhancing their understanding of bond valuation and related financial concepts.