Monroe 3180 User Manual
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Monroe 3180 User Manual

Monroe 3180: user guide
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MONROE
®
3180
User Manual
© 2006 Monroe Systems for Business • All Rights Reserved • Printed in U.S.A.

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Summary of Contents for Monroe 3180

  • Page 1 MONROE ® 3180 User Manual © 2006 Monroe Systems for Business • All Rights Reserved • Printed in U.S.A.

  • Page 2: Table Of Contents

    Contents Introduction ...1 General Entries ...2 Numbers ...2 Dates ...2 Prices...3 Status Modes...4 Fed/Muni Switch ...4 Corrections & Error Messages ...4 Overflow and Underflow ...4 Description of Keys ...5 Security Code 0...11 Price and Yield to Maturity...11 Callable Bonds...12 Yield to Investor ...14 Bond Extensions...14 Dated Bonds ...16 After-Tax Calculations...17...
  • Page 3 Contents Bond Memory...42 Introduction ...42 Storing Securities into Bond Memory ...42 Recalling Securities from Bond Memory ...43 Deleting One Security from Bond Memory...43 Store/Recall Issue Memory ...43 Production Analysis...44 Entry Sequence ...44 Production Corrections ...48 Arithmetic ...49 Addition...49 Constant Addition ...49 Automatic Doubling ...50 Subtraction...50 Constant Subtraction ...51...

  • Page 4: Introduction

    The Monroe TRADER II is a versatile investment tool designed to provide a simplified method for computing bonds and other financial instruments. TRADER II provide fixed income professionals and investors the capability of performing basic trading and investment calculations. TRADER II groups security instruments into 6 general categories.

  • Page 5: General Entries

    NUMBERS Numbers are keyed in as written using the decimal point key to define the position of the decimal point in the number, if any. The decimal point key is not necessary for numbers without a fractional part. CHG SIGN is used to make a postive number negative, or a negative number positive. DATES Dates are entered just like numbers, using the decimal point key to separate the month from the day-of- the-month:...

  • Page 6: Prices

    Remember, when entering a date without a century, the TRADER II assumes a valid date between January 1, 1970 and December 31, 2069. If you want to use a date not in this range, include the century. January 1, 2070 may be entered as 1.012070. EXAMPLE: Jan.

  • Page 7: Status Modes

    STATUS MODE The CODE, CALL/MATURITY, and COUPONS ER YEAR keys are considered to set modes of operation for keys which perform calculations. The “status” of all the modes is continuously displayed on line 1 of th edisplay. Each mode is defined in the Description of Keys section and illustrated in the example calculations.

  • Page 8: Description Of Keys

    DISPLAY This key is used with the other keys to display the current values stored in the TRADER II. The result of pressing the DISPLAY key, if any, will be explained as each key is defined below. C/CE (Clear/Clear Entry) When an entry is not being made, single depression of C/CE clears any pending arithmetic sequence in progress, any constant, as well as the entry disply, allowing you to start the calculation over.
  • Page 9 CALL/ Selects the calculation mode of subsequent calculations. This key toggles between MATURITY the following three modes: 1. MATURITY – selects calculations to maturity date only. 2. CALL – selects calculations to call date only 3. CALL+MAT – selects calculations to call and to maturiyt. When both values are calculated, they are displayed side-by-side (Call on the left and Maturity on the right), the TRADER II retains the lower of the two for use in subsequent calculations.
  • Page 10 Accepts a value in dollars and 32 104 2/32, enter 104.02. The third and fourth decimal positions may be a “5” for an additional 64 , a “35” for 1/128 or a “75” for 3/128. For Example: FRACTIONAL PRICE 100 1/32 100 1/32 + 1/64 100 1/32 + 1/128 100 1/32 + 3/128...
  • Page 11 Accepts the entry of a quantity of securities, per thousand face value, (or uses previously stored number) to compute extended price less concession (principal amount) and accrued interest. DISPLAY, Accepts the entry of a quantity of securities, per thousand face value, (or uses previously stored number) to compute net amount (extended total).
  • Page 12 FUTURE Accepts a future value amount; or pressing this key without a number entry, calculates VALUE the future value. compound value of a series of prior payments, DISPLAY, FUTURE VALUE will display the most recent entry stored. PAYMENT Accepts a periodic payment amount; or pressing this key without a number entry, calculates a periodic payment amount.
  • Page 13 Stores any security currently in working memory into a specific bond memory location BOND according to the number (1-50) entered prior to pressing the key. If no storage location is specified, the TRADER II will automatically store the bond into the next available location. Storing a bond in location 1 will erase any bond previously stored but does not affect the bonds stored in locations 2 through 50.

  • Page 14: Security Code 0

    Security Code 0 calculates Municipal, Corporate, and Federal Agency Bonds as well as any security which pays periodic interest on a 30/360 (30 day month/360 day year) calendar. Refer to Appendix B for a more complete list of securities and the day count basis. PRICE AND YIELD TO MATURITY EXAMPLE: A 8.5% Municipal Bond maturing on April 9, 11996 is sold to yield 9%.

  • Page 15: Callable Bonds

    The maturity date in the previous example should have been April 15, 1996, not April 9, 1996. Recalculate the yield. ENTER PRESS 4.1596 DATE Since the dollar price is already stored, there is no need to re-enter. The DISPLAY key together with the TO PRICE key will recall the previous dollar price.
  • Page 16 ENTER PRESS COUPON 4.2516 DATE 4.2596 CALL DATE BEGIN 102.5 CALL PRICE PRICE Since the price “to call” is lower, that value is stored so you may extend the trade (See Extensions). Verify which value is stored by depressing DISPLAY, TO PRICE. ENTER PRESS DISPLAY,...

  • Page 17: Yield To Investor

    YIELD TO INVESTOR The CALL/MATURITY mode can also be used to calculate “yield to the investor” for a bond currently held. To calculate the yield to investor, treat the bond as if it were called. Enter the market price on the CALL PRICE key, and settlement date on the CALL DATE BEGIN key.
  • Page 18 Once the number of bonds has been entered using one of the above methods, that number of bonds remain stored and need not be re-entered to proceed to another extension. The number of price or yield is calculated. EXAMPLE: A 6% Municipal Bond maturing on October 25, 1990 at a price of 90. Find the yield, the extended principal, accrued interest and net amount for 100 bonds sold on June 24, 1987.

  • Page 19: Dated Bonds

    DATED BONDS To calculate extensions for bonds which have an irregular first coupon (Dated Bonds), enter the dated date then press ISSUE/DATED. Then proceed in the normal manner as for regular bonds. The dated date may be entered at any time prior to performing the calculation for which is to be used. The dated date will remain stored until it is removed by entering 0 and pressing the ISSUE/DATED key.

  • Page 20: After-Tax Calculations

    The TRADER II has the capability of calculating several after-tax functions. These calculations are always based on either or both of two different tax rates, the income tax and capital gains rates. The TRADER II can be used to compute after-tax calculations for notes as well as bonds.

  • Page 21: After-Tax Yield To Price

    Set the FED/MUNI switch and status line as follows: ENTER PRESS COUPON 1.0592 DATE 33.28 RATE 92.625 YIELD AFTER Find the municipal equivalent after-tax yield for the bond above. ENTER PRESS 0.28 RATE AFTER AFTER-TAX YIELD TO PRICE To find the price which must be paid to obtain a desired after-tax yield (calculate the before-tax price), use the DISPLAY, AFTER-TAX keys.

  • Page 22: Before-Tax Yield From After-Tax Yield

    BEFORE-TAX YIELD FROM AFTER-TAX YIELD You may want to calcualte the before-tax yield, if the bond is available at that after-tax price. With the price still in the display, simply press TO YIELD. ENTER PRESS YIELD RESULTS DISPLAYED Yield 10.786% (M)

  • Page 23: Zero-Coupon Bonds

    ZERO-COUPON BONDS Zero Coupon or stripped coupon bonds can be calculated exactly as a normal coupon bond by entering a coupon interest rate of 0%. EXAMPLE: Find the yield of a Zero Coupon Bond that matures on January 01, 1999 at a price of 24.90 on June 24, 1987.

  • Page 24: Annual-Coupon And Eurobonds

    ANNUAL-COUPON AND EUROBONDS Most domestic bonds are issued to pay coupon interest semi-annually. However, most Eurobonds, pay coupons on a annual basis. EXAMPLE: Find yield to maturity for $25,000.00 annual-coupon bond with a 7.5% coupon currently available at a 7% yield, maturing October 25, 1989. ENTER PRESS COUPONS...

  • Page 25: Duration

    DURATION Duration is a measure of the timing of the cash flow (i.e., the interest payments and the principal repayment) to be received from a given coupon security. The duration of the security is equal to (a) the sum of the present values of each of the cash flows weighted by the time to receipt of each cash flow divided by (b) the total of the present values of the cash flows.

  • Page 26: Value Of A Basis Point

    VALUE OF A BASIS POINT The VAL key provides two calculations which combine several TRADER II functions to obtain the movement of either price or yield. VAL calculates the difference in dollar price, if the yield moves by .05% (Codes 0 – 4 and 6) or if the discount rate changes by .01% for Code 5. DISPLAY, VAL calculates the difference in yield in basis points if the price changes by 1/32 The VAL key also allows you to enter other spread values.

  • Page 27: Security Code 1

    SECURITY CODE 1 Code 1 calculates Government Bonds as well as any coupon security which pays periodic interest on an Actual (Actual days in a month/actual days in a year) calendar. All of the calculations and options available in Code 0 can also be performed using Code 1. Refer to Appendix B for a more complete list of securities and the day count basis.

  • Page 28: Odd Coupons

    ODD COUPONS Some bonds are issued with an :”odd first coupon”. This is a bond for which there is more (or less) than one normal coupon period from issue date to the date of the first coupon payment. For example, a semi- annual coupon is considered to be “short”...

  • Page 29: Price And Yield To Maturity

    PRICE AND YIELD TO MATURITY The TRADER II will consider the odd coupon for price, yield and accrued interest calculations whenever the settlement dat is prior to the 1 (0) and press the 1 COUPON DATE key. This method allows the correct accrued interest to be computed from the issue/dated date but not in the price or yield calculation.

  • Page 30: Security Codes 2 - 4

    Security Codes 2, 3 and 4 is used to calculate notes paying interest at maturity. Notes may be calculated based on three different day count basis according to the code entered: CODE Entries describing a note are the same for Security Code 0. The interest rate us entered using the coupon key and the issue date on the issue/dated key.

  • Page 31: Note Extensions

    NOTE EXTENSIONS Extensions for these securities are done in exactly the same manner as for Code 0 securities, except the number of bonds entry prior to the extension is replaced with the face value is retained and does not have to be re-entered for subsequent extensions.
  • Page 32 Now compute the interest due at maturity. ENTER PRESS DISPLAY, DATE SETTLEMENT DATE RESULTS DISPLAYED Maturity Date Tue. 11-03-87 Settlement Date Sat. 11-03-1987 Prin 499,477.22 Int 13,343.75...

  • Page 33: Security Code 5

    Security Code 5 is used to calculate Treasury Bills and other discount instruments, such as banker’s acceptances, on an Actual/360 calendar. Refer to Appendix B for a more complete list of securities and the day count basis. Given the price, the discount rate is calculated. The bond equivalent yield is also available (DISPLAY, TO YIELD).

  • Page 34: Code 5 After-Tax Calculations

    ENTER PRESS DISPLAY YIELD CODE 5 AFTER-TAX CALCULATIONS The TRADER II has the added capability of performing after-tax calculations in Security Code 5. The basic operating procedures remain the same as in other Codes, however, the nature of discount securities changes the results obtained using the after-tax functions. AFTER TAX DISCOUNT RATE AFTER-TAX provides the after-tax discount rate (not yield);...

  • Page 35: Security Code 6

    SECURITY CODE 6 Security Code 6 calculates stepped coupon bonds, as well as any security which has two coupon periods, wach with it’s own coupon rate, and pays periodic interest on a 30/360 (30 day month/360 day year) calendar. Typical examples of stepped coupon instruments are: Growth and Income Securities and Capital Appreciation/Future Income Securities.

  • Page 36: Compound Interest/Annuity Functions

    COMPOUND INTEREST/ANNUITY FUNCTIONS The compound interest functions provide present value, future value, N (Number of Periods) and payment calculations. In all cases the annual interest rate is entered on the COUPON key and the number of compounding periods is entered on the COUPONS PER YEAR key. The Security Code and other status modes in the display have no meaning for the Compound Interest/Annuity functions.

  • Page 37: Present Value Calculation

    ENTER PRESS PRESENT VALUE FUTURE VALUE Here is the payment schedule of the account over the 6 periods. Note that the balance at the end of the first period is $50.00. Interest accrues for the first period but is not credited to the account until after a complete compounding period.

  • Page 38: Payment Calculation

    ENTER PRESS COUPON COUPONS PER YEAR 5000 PRESENT VALUE FUTURE VALUE PAYMENT The $118.95 monthly payment is displayed with a minus sign to indicate computing a payment for a Present Value. RESULTS DISPLAYED Coupon Rate 15.000^% Coupons/Year 12. Number of Periods 60. Present Value 5,000.00 Future Value 0.00 Payment Amount –118.95...

  • Page 39: Number Of Periods

    EXAMPLE: What semi-annual deposit is required to accumulate $50,000.00 in 15 years at 8% compounded semi-annually? The account is opened with and initial deposit of $500.00. ENTER PRESS COUPON COUPONS PER YEAR PRESENT VALUE 50000 FUTURE VALUE PAYMENT NUMBER OF PERIODS The N key calculates the number of payments to obtain a future value or the number of compound periods required for a present value to obtain a future value.
  • Page 40 EXAMPLE: How many periods are required for a deposit of $5000.00 to grow to $12,000.00 at 7.5% compounded yearly? ENTER PRESS COUPON COUPONS PER YEAR 5000 PRESENT VALUE 12000 FUTURE VALUE PAYMENT RESULTS DISPLAYED Coupon Rate 7.50% Coupons/Year 1 Present Value 5,000.00 Future Value 12,000.00 Payment Amount 0.00 Number of Periods 12...

  • Page 41: Average Life

    The average life function calculates the average life and maturity date of a sinking fund issue. Average life calculations may be performed for Code 0 issues only. Retirements may be annual or semi-annual, or a combination of both; the COUPON PER YEAR key is set before each group of sinkers is entered.
  • Page 42 Example: Calculate the average life and date of average life for the following issue: Settlement date June 24, 1987 Coupon 6.5% Total bonds outstanding 6000 Final Maturity date March 1, 2009 GROUP BEGINNING DATE September 1, 1994 September 1, 2000 March 1, 2002 March 1, 2006 ENTER...
  • Page 43 ENTER PRESS Group 2 DISPLAY, CALL DATE BEGIN DISPLAY, DATE COUPONS To continue with this example, set status line as shown below. ENTER PRESS LIFE Group 3 3.0102 CALL DATE BEGIN 9.0105 DATE LIFE Group 4 DISPLAY, CALL DATE BEGIN RESULTS DISPLAYED Call Date Fri.

  • Page 44: Average Life Corrections

    ENTER PRESS 9.0108 DATE LIFE The schedule is complete, enter the final maturity date (the remaining bonds are accumulated using the date) and calculate the average life in decimal years and the date of average maturity. ENTER PRESS 3.0109 DATE DISPLAY LIFE DISPLAY...

  • Page 45: Bond Memory

    INTRODUCTION The TRADER II has three security memory areas. Working Memory is the area where security information is stored upon entry to perform all calculations. This memory can only hold one security description at a time. Each time you enter a security’s coupon rate, maturity date, call feature, etc. you are describing the security to the TRADER II working memory.

  • Page 46: Recalling Securities From Bond Memory

    RECALLING SECURITIES FROM BOND MEMORY Use the DISPLAY, STR BOND key to recall a security to working memory from a specific bond memory according to the number (1 – 50) entered prior to pressing the key. The status line (top line of the display) is updated to the status stored along with the security when saved previously, and the securities maturity date and coupon is displayed on the entry/result line (bottom line of the display).

  • Page 47: Production Analysis

    Production analysis allows a group of bonds and other securities with varying interest rates, maturities, prices and yields, to be totaled and averaged, as in a portfolio, using the production function. ENTRY SEQUENCE FOR PRODUCTION ANALYSIS The securities are entered and calculated in the usual manner, except that all securities must have the same settlement date throughout the production.
  • Page 48 EXAMPLE: Perform a production analysis on the following series of bonds with semi-annual maturities. The settlement date is June 24, 1987 and interest is calculated from January 15, 1987. GROUP BONDS MATURITY DATE November 25, 1987 May 25, 1989 November 25, 1989 May 25, 1999 ENTER PRESS...
  • Page 49 ENTER PRESS Group 2 COUPON 8.25 PRICE ISSUE Group 3 7.75 COUPON 11.2598 DATE YIELD CONC ISSUE Group 4 3.2599 DATE PRICE ISSUE Adding issues is now complete, press the DISPLAY, PROD key to compute the averages and totals of the bonds.
  • Page 50 ENTER PRESS DISPLAY, PROD PROD PROD PROD PROD PROD PROD PROD PROD PROD PROD PROD PROD PROD PROD To access any result directly, enter the appropriate sequence number and press PROD. For example, to start from the 8 summary (Average Redemption), enter and press PROD. ENTER PRESS PROD...

  • Page 51: Production Corrections

    PRODUCTION CORRECTIONS Any security group can be deleted or added to manipulate the portfolio stored in issue memory. Refer to the Bond Memory Section for detailed examples. To correct erroneous input, recall the bond to working memory, make the necessary modification and restore the bond to issue memory. Remember, the production totals and averages will be re-computed using the security groups stored in issue memory each time memory each time DISPLAY, PROD key is pressed.

  • Page 52: Arithmetic

    In addition to its securities calculation capabilities, TRADER II is a 14 digit, desktop display calculator. It operates in “algebraic logic”, which means that all calculations are complete with the = key. All arithmetic results are shown in floating decimal format.

  • Page 53: Automatic Doubling

    ENTER PRESS AUTOMATIC DOUBLING Repeated consecutive depressions of EXAMPLE: = 48 ENTER PRESS SUBTRACTION EXAMPLE: 456 = 333 ENTER PRESS – – EXAMPLE: 9 = 7 ENTER PRESS RESULTS DISPLAYED provides automatic doubling of the quantity. RESULTS DISPLAYED RESULTS DISPLAYED -333 RESULTS DISPLAYED...

  • Page 54: Constant Subtraction

    ENTER PRESS CONSTANT SUBSTRACTION The minuend may be retained as a constant for continued subtraction. The constant is saved until C/CE is depressed or a new constant is entered. – EXAMPLE: 50 = 50 – 25 = 75 – 48 = 52 ENTER PRESS MULTIPLICATION...

  • Page 55: Constant Multiplication

    CONSTANT MULTIPLICATIONS The first number (multiplicand) may be retained for continued multiplication. The constant is saved until C/CE is depressed or a new constant is entered. EXAMPLE: 6 = 30 9 = 45 2 = 10 ENTER PRESS AUTOMATIC SQUARING Repeated consecutive depressions of EXAMPLE: = 256...

  • Page 56: Division

    ENTER PRESS RESULTS DISPLAYED DIVISION ÷ EXAMPLE: 123 = 3.7073170731707 ENTER PRESS ÷ EXAMPLE: 2 = 4 ENTER PRESS CONSTANT DIVISION The second number (divisor) may be retained for continued multiplication. The constant is saved until C/CE is depressed or a new constant is entered. EXAMPLE: 2 = 50 2 = 24...

  • Page 57: Reciprocals

    RECIPROCALS The constant division feature can be used to calculate reciprocals. EXAMPLE: Find 1/32 ENTER PRESS MIXED CALCULATIONS The arithmetic functions may be used in combination to solve mixed equations; intermediate results are displayed upon the depression of each function key. –...

  • Page 58: Appendix A

    Invalid Code Settlement Date Required Invalid Date Issue Date Required Dated Date > Settlement Date Issue Date > Settlement Date Setl Date > Mat Date Setl Date > Call Date Setl Date > Conv. Date Conv. Date > Mat Date Call Date >...

  • Page 59: Appendix B

    U.S. TREASUREY ISSUES:: Certificates of Indebetedness U.S. Treasury Bills U.S. Treasury Tax-Anticipation Bills (TABS) U.S. Treasury Bonds U.S. Treasury Notes FEDERAL AGENCY ISSUES: Commodity Credit Corporation (CCC’s) Export-Import Bank Participation Certificates Farmers Home Administration Insured Notes Federal Home Loan Bank (FHLB) Notes & Bonds Federal Housing Administration (FHA) Debentures Federal Intermediate Credit Bank (FICB)
  • Page 60 STATE AND LOCAL GOVERNMENT ISSUES: Tax Supported Bonds Revenue Supported Bonds Assessment Supported Bonds Special Supported Bonds Pricing/ Interest Count Classificaiton Basis Periodic 30/360 Periodic 30/360 Periodic 30/360 Periodic 30/360 Code...

  • Page 61: Day Count Basis

    MONROE MAKES NO WARRANTY OF ANY KIND WITH REGARD TO EITHER PROGRAMMING OR PROGRAM CARTRIDGES WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT OR OTHERWISE. PROGRAMMING AND PROGRAM CARTRIDGES ARE SUPPLIED BY MONROE “AS-IS”. MONROE MAKES NO WARRANTY THAT THE PROGRAMMING OR PROGRAM CAR- TRIDGES WILL MEET THE CUSTOMER’S REQUIREMENTS OR THAT THEIR OPERATION WILL BE...

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