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CFALA Review: Tips for using the TI calculator
By David Cary
CFALA REVIEW MATERIALS
USING THE TI-BAII PLUS
CALCULATOR
David Cary, PhD, CFA
Spring 2015
dcary@dcary.com
(helpful if you put CFA Review in subject line)
Using the TI‐BA2+
Notes by David Cary
These should help you be more efficient with
For some of the topics I show more than one
way to do a calculation.
Some of these slides are in the Level I lecture
notes and others are new.
CFA Society Los Angeles
your calculator.
2/9/2015
2
1
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Table of Contents
Summary of Contents for CFA TI BA II Plus Professional
- Page 1 CFALA Review: Tips for using the TI calculator 2/9/2015 CFALA REVIEW MATERIALS USING THE TI-BAII PLUS CALCULATOR David Cary, PhD, CFA Spring 2015 dcary@dcary.com (helpful if you put CFA Review in subject line) Using the TI‐BA2+ Notes by David Cary These should help you be more efficient with your calculator. For some of the topics I show more than one way to do a calculation. Some of these slides are in the Level I lecture notes and others are new. CFA Society Los Angeles By David Cary...
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Page 2: Basic Setup
CFALA Review: Tips for using the TI calculator 2/9/2015 CFA Exam acceptable calculators TI BA II Plus TI BA II Plus Professional (there is a newer Have a fresh battery, version that looks Consider taking a spare different) CFA Society Los Angeles BASIC SETUP • To set the number of decimal places:... -
Page 3: Order Of Operations
1. Using your calculator memories, 2. Using parentheses, and 3. Switching the TI-BAII+ into “AOS” “Algebraic Operating System.” CFA Society Los Angeles USING CHN OR AOS The default setting in your calculator is probably “Chn” which stands for chaining. Calculations are done in the order they are entered. -
Page 4: Using Memories
] [SET] again to change back to Chn. • Then hit [CE/C] to start. • (You can switch back and forth if you wish, I stay with AOS) CFA Society Los Angeles USING MEMORIES • Your calculator has 10 easily accessible memories: #0 to #9. - Page 5 Then if you press 4 [STO] [x] 1, the value in #1 will be 12.00, (3x4=12) and Then if you press 4 [STO][] 1, the value in #1 will be 3.00 (12 4=3). CFA Society Los Angeles CALCULATING MEANS AND COVARIANCES OF TWO ASSET PORTFOLIO 75% 25% •...
- Page 6 If they give you correlation you have to multiply by the standard deviations to get covariance for the third part. CFA Society Los Angeles CALCULATING MEANS AND COVARIANCES OF TWO ASSET PORTFOLIO 75% 25% 2.
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Page 7: Which Method To Use
5: [ x] = 20.22 “the standard deviation si 20.22%” • See previous bottom note if given standard deviations and/or correlations. CFA Society Los Angeles WHICH METHOD TO USE • I like AOS. For the simpler calculations you can do them directly. For more complicated calculations you can still use the memory or parenthesis methods even if the calculator is in AOS mode. - Page 8 0.0000 Blank above number Note: The [BEG] key is above the [PMT] key. CFA Society Los Angeles Calculator Hints: # of Pmts/Yr While I prefer to adjust N and I directly, the TI can be set to do the calculations (for daily or …):...
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Page 9: Uneven Cash Flows
1, $200 at the end of year 2, $400 at the end of year 3 and $600 at the end of year 4, using 10%, and then add all those up, OR... CFA Society Los Angeles = 0, CF = 100, CF... - Page 10 • NPV = 33.47 • IRR = 8.79%, note NPV < 0, IRR < discount rate. Like the previous example, except for initial cost. CFA Society Los Angeles NPV & IRR OF UNEVEN I = 10%, CF = -1000, CF...
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Page 11: Cash Flows
Shows CØ1 [CF] 1000[ ⁄ ][ENTER] [] Shows FØ1 CFo=‐1000 [] Shows CØ2 You can use the down arrows to find and correct any other cash Etc… flow errors. FØ_ is used if the cash flow is repeated several years in a row. CFA Society Los Angeles Cash Flows • Note: on the exam they may try a trick: • Assume the cash flows are = ‐1000, CF = 100, CF = 200, CF = 0, = 400, CF = 500. • You MUST enter CF as 0 or the remaining cash flows will be for the wrong periods and you will get the wrong answer! CFA Society Los Angeles... - Page 12 3. Coefficient of Variation 2010 32.4% 4. Sharpe Ratio 2011 16.5% 2012 3.8% 3.0% Similar to example in D.Cary lecture notes. CFA Society Los Angeles TI-BAII+ (and Pro): On Screen ][Data] 0.0000 Opens Input ][CLR WORK] 0.0000 Clears Memories 13.5 [ENTER] X01 = 13.5000...
- Page 13 = (4.90% 3.0%) / 22.99% 2011 16.50% 11.60% 2012 3.80% 1.10% = 0.083 29.40% 95.4% Mean 4.90% 6 median 8.65% 15.90% CFA Society Los Angeles Geometric and Harmonic Mean Using the Statistics Function for the calculation is after this slide. • Data: 3, 3, 4, 6, 22 Geometric Mean (ALG) Harmonic Mean (ALG) KEYS DISPLAY KEYS DISPLAY 3 [] 3.0000 3 [1/x] [+] 0.3333 9.0000 3 [1/x] [+] 0.6667...
- Page 14 CFALA Review: Tips for using the TI calculator 2/9/2015 • The next two slides show how to use the built‐ in statistic functions to do Geometric and Harmonic Average calculations. • I’m not sure they are any easier, but thought I would include them so you can compare. CFA Society Los Angeles Using the Statistics Function Note: converting the numbers to logs, calculating the to Calculate Geometric Mean average, then using e is the same as multiplying the • Data: 3, 3, 4, 6, 22 numbers and taking the root. Keys Display Comments ] [DATA] X01 0.0000 Clears Memories ] [CLR WORK] 3 [LN] [ENTER] X01=1.0986 Converts to Log, Enters first value 3 [LN] [ENTER] X02=1.0986 Converts to Log, Enters second value 4 [LN] [ENTER]...
- Page 15 Converts to reciprocal, Enters value 22 [1/x] [ENTER] X05 = 0.0455 Converts to reciprocal, Enters value Just shows in linear format ] [DATA] N = 5.0000 Number of observations x = 0.2258 Gets average of reciprocals The reciprocal of the average [1/x] 4.4295 reciprocal. The Answer! CFA Society Los Angeles Viewing and/or Correcting for inputs when using STAT function After inputting the values You can correct an input for a calculation, you can value when you find an see the values by going back error by using the enter key. to the [2 ] [DATA] key and For example, assume you use the arrows. For entered 30 for XØ1 when it example, should have been 3.
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Page 16: Tree Diagram
60% probability that EPS = $2.20 and a 40% probability that EPS = $2.00 • Note: Actual calculator steps included following next slide. CFA Society Los Angeles Figure 8-2 Expected Value if rates decrease: EPS = $2.60 ×... - Page 17 • I include the “1-V” method both as an alternative and so you can see it being used. CFA Society Los Angeles You can also use the DATA/STAT function in the ‘1-V’ mode, Since there are two probabilities for each branch, the “Y” values must be calculated with “% x decimal = 60 x 0.25 = 15”...
- Page 18 CFALA Review: Tips for using the TI calculator 2/9/2015 Factorial, Combinations, and Permutations • N Factorial (N!) is when you multiply N x (N‐1) x (N‐2) x … x 2 x 1 = N! • There is a built in function in your calculator to do this: ][x] = [x!], To get 5!: 5 [2 ][x!] = 120 • This can be useful for combination calculations: To select a subset of 3 items out of 5: = 5! / ((5‐3!)(3!)) = 10 Your TI has a built in function for this: [2 ][+] = [ = 5 [2 ] 3 [=] 10 CFA Society Los Angeles Factorial, Combinations, and Permutations • This can also be useful for permutation calculations: To select and rank a subset of 3 items out of 5: = 5! / (5‐3!) = 60 Your TI has a built in function for this: [2 ][‐] = [ = 5 [2 ] 3 [=] 60 CFA Society Los Angeles By David Cary...