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),…
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),…
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.
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…
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…
This article explains how to calculate bond duration and convexity using the HP 10BII+ financial calculator. It introduces an approximation method that simplifies the process, avoiding complex formulas. The article provides step-by-step instructions for calculating modified duration, Macaulay duration, and convexity by determining bond prices at different yields and applying these to approximation formulas. The method is accurate enough for practical use, making it accessible to users who may not be familiar with advanced calculus.
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),…