Time value of money and financial calculator tutorials
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Time value of money and financial calculator tutorials
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 keys, 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),…
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),…
In this tutorial we will see how to amortize a fixed-rate loan using the HP 10BII+ calculator from Hewlett Packard. 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 first…
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 HP 10B or 10BII. Of course, there are formulas that you can type in (see below), but they aren’t easy for most people to remember and are tedious to enter. In this article I will show you how…
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 keys, then this will be a simple…
This article explains how to calculate the call price of a bond with a make-whole call provision using the HP 20b calculator.
Make-whole call provision is beneficial to investors because they get the present value of all remaining cash flows if the bond is called early. The calculation considers the coupon rate, maturity date, and a discount rate based on a Treasury security.
The article provides a step-by-step guide for calculating the call price using both the Time Value of Money (TVM) keys and the Net Present Value (NPV) function on the HP 20b calculator.
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),…
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…
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…
The article provides a practical guide for calculating bond portfolio metrics like modified duration, Macaulay duration, and convexity using the TI-84 Plus calculator. It explains that while traditional formulas for these metrics are complex and tedious for manual entry, they can be approximated with high accuracy on the calculator. The method involves calculating the bond price at slightly different yields, saving these prices in the calculator’s memory, and then using them to approximate the metrics through simple formulas. This approach is accurate enough for practical use and eliminates the need for memorizing complicated formulas.
This tutorial explains how to amortize a fixed-rate loan using the HP 20b financial calculator. It guides users on calculating the principal and interest for individual payments or a range of payments. The article demonstrates using the calculator’s built-in functions to break down loan payments into principal and interest components and how to determine the remaining balance after each payment. Additionally, it briefly compares this method with using a spreadsheet for creating a full amortization schedule, highlighting the limitations and practical applications of the HP 20b calculator's amortization functions.
Duration and convexity are important numbers in bond portfolio management, but it is far from obvious how to calculate them on the HP 20b. 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 you…
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 keys, then this will be a simple…