Groundlearn / BA II Plus / Nominal to effective rates
BA II Plus effective annual rate: the ICONV worksheet
Comparing quoted rates with different compounding, and EAR questions.
The keys
| 2NDICONV | Opens the interest conversion worksheet. |
| rateENTER↓ | NOM is the stated annual rate. |
| ↓periodsENTER | C/Y is compounding periods per year. |
| ↑CPT | Computes EFF. |
Worked example
A bank quotes 6% compounded quarterly. What is the effective annual rate?
| 2NDICONV | Open the worksheet. |
| 6ENTER↓ | NOM = 6. |
| ↓4ENTER | C/Y = 4. |
| ↑CPT | EFF = 6.136. |
The trap
Entering EFF and computing NOM works too, which is useful when a question gives an effective rate and needs a periodic one.
The terms behind it
- Effective annual rateThe rate that, compounded once a year, gives the same growth as a stated nominal rate compounded more often.
- Continuous compoundingCompounding over infinitely small intervals.
More BA II Plus keystrokes
- How to set up the BA II Plus for the CFA and FRM examsOnce, before you start practising — and again if the calculator is reset.
- BA II Plus time value of money (TVM): keystrokes and a worked exampleAnnuities, loans, bond prices and retirement problems in every level.
- BA II Plus annuity due: BGN mode keystrokes and the trapLeases, rent, insurance premiums and retirement withdrawals that begin today.
- BA II Plus NPV and IRR: cash flow worksheet keystrokesCapital budgeting, private equity cash flows and money-weighted returns.
- BA II Plus loan amortization: interest and principal for any yearMortgage payments, interest and principal splits, and outstanding balances.
- BA II Plus mean and standard deviation: the DATA and STAT worksheetsSample statistics on returns in Quantitative Methods.
- BA II Plus bond price from yield: keystrokes and the semi-annual trapFixed income pricing at every level, using the TVM keys.
BA II Plus is a trademark of Texas Instruments. Groundlearn is not affiliated with Texas Instruments, CFA Institute or GARP; the name is used only to say which calculator these keystrokes are for. Educational content only. Always check your exam body's current calculator policy.
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