Do I even need a financial calculator?

[Hobogov]

I am through about 200 pgs of my ASM manual and am almost completely through Chapters 3 and 4, which deal with annuities. I have never been a huge proponent of calculators, as I graduated college with a math degree and no experience with any higher form than a TI-32. To this point, I have probably been through 300 problems and only twice have I used my financial calculator. I believe both dealt with calculating an interest rate. I probably could have gotten the one answer my "plugging in" the answer from the direct answer key. For the other "in between" multiple choice selection (e.g. greater than 7.04 less than 7.08), I also think I would have been able to calculate through substitution of answers, without using the financial calculator. I like to think things through on paper rather than memorize techniques on a calculator. The reason I am asking is that time is a precious issue for me. I currently work as a math teacher and athletic director and find myself only finding about 20 hours a week to study. If I could omit the time in trying to learn the calculator notes, I think I would be progressing through my studies much more quickly.

[JDav]

Honestly, as a math teacher it should only require an hour of your time to learn enough about a financial calculator to do everything required. And although I can't say for certain you would fail without one, I would be placing large bets in that direction.

Just figure out how the N I/Y PV PMT FV row of keys work, and you shouldn't really need anything else.

[thodges314]

I also would recommend one.

[Aizoo22]

I am through about 200 pgs of my ASM manual and am almost completely through Chapters 3 and 4, which deal with annuities. I have never been a huge proponent of calculators, as I graduated college with a math degree and no experience with any higher form than a TI-32. To this point, I have probably been through 300 problems and only twice have I used my financial calculator. I believe both dealt with calculating an interest rate. I probably could have gotten the one answer my "plugging in" the answer from the direct answer key. For the other "in between" multiple choice selection (e.g. greater than 7.04 less than 7.08), I also think I would have been able to calculate through substitution of answers, without using the financial calculator. I like to think things through on paper rather than memorize techniques on a calculator. The reason I am asking is that time is a precious issue for me. I currently work as a math teacher and athletic director and find myself only finding about 20 hours a week to study. If I could omit the time in trying to learn the calculator notes, I think I would be progressing through my studies much more quickly.
I sounds wierd but i would recommed you one as it is not alweys that you will come across multiple choices and work yourself out via substitution

[Aizoo22]

:Waldo:
I am through about 200 pgs of my ASM manual and am almost completely through Chapters 3 and 4, which deal with annuities. I have never been a huge proponent of calculators, as I graduated college with a math degree and no experience with any higher form than a TI-32. To this point, I have probably been through 300 problems and only twice have I used my financial calculator. I believe both dealt with calculating an interest rate. I probably could have gotten the one answer my "plugging in" the answer from the direct answer key. For the other "in between" multiple choice selection (e.g. greater than 7.04 less than 7.08), I also think I would have been able to calculate through substitution of answers, without using the financial calculator. I like to think things through on paper rather than memorize techniques on a calculator. The reason I am asking is that time is a precious issue for me. I currently work as a math teacher and athletic director and find myself only finding about 20 hours a week to study. If I could omit the time in trying to learn the calculator notes, I think I would be progressing through my studies much more quickly.
I sounds wierd but i would recommed you one as it is not alweys that you will come across multiple choices and work yourself out via substitution

[Jabberwocky]

There is no rule about bringing more than one calculator, so I intend to bring 2 and rely on the BAII plus pro mainly for the financial functions. Worse case scenario, I spent an extra 34 bucks on something i didn't need.

[rjkst14]

:Waldo:
I sounds wierd but i would recommed you one as it is not alweys that you will come across multiple choices and work yourself out via substitution

well said. in the real world there arent a list of answers you can pick from. i would get a calc for sure. even if its just checking your answers at the end of the exam if you still have time left

[Tal]

i cant trust my BA plus calculator!
For the same problem i get different results.Is it cuz i maybe should reset it every time i switch from one problem to another or there is something else about using it i should know?

[jthias]

i cant trust my BA plus calculator!
For the same problem i get different results.Is it cuz i maybe should reset it every time i switch from one problem to another or there is something else about using it i should know?

I notice that the most common mistake for me is have the wrong sign +/- attached to a particular value. Although that doesn't happen as much now as it did before toward the beginning.

Sometimes it's better (faster) not to reset. Suppose you calculate a_10]5% , and you want to calculate a_10]6% next. It's faster to just change the int. rate to 6% and use the values that have already been stored in memory from calculating a_10]5% earlier.

[wonderacle]

not necessary,
but it helps if you have one,

[GooseyGoose]

I always figured everyone would know how to use a financial calculator for FM. It's like steroids, but legal. Imagine playing ball and being the only guy out there without the roids. It would be carnage...

[GooseyGoose]

There is no rule about bringing more than one calculator, so I intend to bring 2 and rely on the BAII plus pro mainly for the financial functions. Worse case scenario, I spent an extra 34 bucks on something i didn't need.

I'm personally bringing a calculator for each question. That way I don't have to worry about silly things like resetting values and worrying if I'm in end or bgn mode. And who knows, maybe the guy in charge of resetting calculators will accidentally skip over one. Hello cheatsheet.

[divergence2]

financial calculators also have the upside of not having too many calculations on one screen. Those long formulas for increasing annuities can be confusing.

[wat]

Looks like everyone's saying "Get a financial calculator".

I'll play devil's advocate. Back when I took interest theory as part of an SOA exam, it was one of four subjects covered on Course 2 (microecon, macroecon, finance and interest theory), so naturally, there were less interest theory questions on that exam than there were on the current FM exam.

That being said, though, I brought a BA-35 calculator with me to the exam and used it twice - once to calculate an annuity and once to get the "n" of a different annuity, but both times, I had already calculated the number with my TI-30XII and was just verifying that I had done it right. So, for all intents and purposes, the financial calculator was unnecessary. I did also buy a BA-II+, but never used it on an actuarial exam.

I can't speak for the financial economics portion of the exam, but pretty much the only time you might need the financial calculator is when they ask you to get an interest rate out of the present value of annuities or a series of cash flows. Generally speaking, annuities and series of cash flows may turn into a polynomial function that's not easily solved w/out a financial calculator or a computer to estimate the root(s) of the function. You might also find the Cash Flow function of the BA-II+ useful, but I've never used it.

[thodges314]

Looks like everyone's saying "Get a financial calculator".

I'll play devil's advocate. Back when I took interest theory as part of an SOA exam, it was one of four subjects covered on Course 2 (microecon, macroecon, finance and interest theory), so naturally, there were less interest theory questions on that exam than there were on the current FM exam.

That being said, though, I brought a BA-35 calculator with me to the exam and used it twice - once to calculate an annuity and once to get the "n" of a different annuity, but both times, I had already calculated the number with my TI-30XII and was just verifying that I had done it right. So, for all intents and purposes, the financial calculator was unnecessary. I did also buy a BA-II+, but never used it on an actuarial exam.

I can't speak for the financial economics portion of the exam, but pretty much the only time you might need the financial calculator is when they ask you to get an interest rate out of the present value of annuities or a series of cash flows. Generally speaking, annuities and series of cash flows may turn into a polynomial function that's not easily solved w/out a financial calculator or a computer to estimate the root(s) of the function. You might also find the Cash Flow function of the BA-II+ useful, but I've never used it.

If you get quick with a financial calculator, though, it can be quicker and easier to shuffle things between the various worksheets and the 9 memory locations then to do work on paper. Take something like computing the pv of a 10 year annuity immediate at 6 percent nominal interest semiannually paying $20 annually (which is probably a component of a more complex problem.

1.03 'x^2' -1 = *100 = 'I/Y' 10 'N' 0 'FV' 20 '+/-' 'PMT' 'CPT' 'PV'

Then say you want to know that this was worth 5 years prior.

'RCL' 'I/Y' / 100 = + 1 = 'y^x' 5 '+/-' = * 'RCL' 'PV' =

If you study with your calculator then it gets to the point where you can just zip through the calculations on parts of a lot of problems. I didn't memorise keystroke sequences above, I picked up my calculator and worked them quickly and observed how I did it. As long as you also understand what you are doing enough to set up the equations for problems requiring them, I think think that there is nice benefit to the financial calculator.

[jthias]

What I like about the TVM keys is that they help reinforce my understanding of the material (same with CF keys).

When I solve an equation like 850 = a_20]i + 1000v^20, using the TVM keys, I have to know which values are which; i.e., know which values go to PV, FV, PMT, and n respectively; whereas, when using the regular keys, I'm merely number crunching to get an answer from my calculator.

[mjlee08]

What other ways do you guys find the calculator to be useful?

I use the TVM keys quite a bit, and the IRR and CF when needed. I remember reading about using it to calculate the number of days between 2 dates and the amoritzation and bond buttons (Is knowing them really necessary if you have the formulas?)

What else in the calculator do you guys use?

[rshack87]

I love the amort button. It has helped me lots on finding total principle or interest in a certain period without always having to manually calculate.

[mjlee08]

Thats true. I've noticed a lot of the unique practice problems ask you to find the sum of the principal or interest paid, which is when I usually use the formulas. But you're right, I should def review it and make sure I know how to do it to check my calculations.

Any other ideas? I think I read somewhere that some bought to calculators for the END and BGN mode since it is so easy to forget to set it back to END. Anyone else also doing this? I haven't been practicing with 2 so I thought it might become too confusing. Great idea though.

[wat]

If you get quick with a financial calculator, though, it can be quicker and easier to shuffle things between the various worksheets and the 9 memory locations then to do work on paper. Take something like computing the pv of a 10 year annuity immediate at 6 percent nominal interest semiannually paying $20 annually (which is probably a component of a more complex problem.

1.03 'x^2' -1 = *100 = 'I/Y' 10 'N' 0 'FV' 20 '+/-' 'PMT' 'CPT' 'PV'

Then say you want to know that this was worth 5 years prior.

'RCL' 'I/Y' / 100 = + 1 = 'y^x' 5 '+/-' = * 'RCL' 'PV' =

If you study with your calculator then it gets to the point where you can just zip through the calculations on parts of a lot of problems. I didn't memorise keystroke sequences above, I picked up my calculator and worked them quickly and observed how I did it. As long as you also understand what you are doing enough to set up the equations for problems requiring them, I think think that there is nice benefit to the financial calculator.

I can definitely see the merits of having a financial calculator, and probably for most people, they'd benefit from having one (or maybe two) with them on exam day. For me, though, what I liked about the TI-30XII (and did not like about the financial calculators) was the fact you could look back at what you typed in and check your answers. Too often I would mistype a number in trying to calculate something and end up with a wrong answer. For me, it was easy to just look back at what I had typed and then hit enter, rather than mistyping it, hitting =, then wondering why my answer was so far off, or worse, marking the wrong answer.

That was just my personal preference - I don't mean to say that it's the choice that the original poster should make.

[jthias]

On a side note, has anyone had the misfortune of dropping their BA-II calc sooo many times they lost count? Most of the drops were on hard surfaces from at least desk height or more. I can't believe it's still working :D Oddly enough, I can't recall ever dropping either of my two Ti-30Xs. Hehe, the last drop was today at McDonalds, quickly went to reach for a cup and pushed the damn thing off the table with my arm. :)

[thodges314]

I can definitely see the merits of having a financial calculator, and probably for most people, they'd benefit from having one (or maybe two) with them on exam day. For me, though, what I liked about the TI-30XII (and did not like about the financial calculators) was the fact you could look back at what you typed in and check your answers. Too often I would mistype a number in trying to calculate something and end up with a wrong answer. For me, it was easy to just look back at what I had typed and then hit enter, rather than mistyping it, hitting =, then wondering why my answer was so far off, or worse, marking the wrong answer.

That was just my personal preference - I don't mean to say that it's the choice that the original poster should make.

Hmm . . . Usually if I have something like that happening I check the various worksheets, and possibly recompute things like interest. I also store numbers from intermediate steps in memory locations. So if there are several chunks of calculations together, including two which are a duplication of the same calculation, I store each chunk in a separate memory location and add and multiply them together.

For example, problem 13 in FM-09-05 got me in the form
100*e^(27/300)*e^(189/300) - 100e^(27/300) =(2-e^(189/300))x

So I stored 100*e^27/300 in 7
e^(189/300) in 8
RCL 7 * RCL 8 in 9
2-RCL 8 in 6
then RCL 9 - RCL 7 = / RCL 6 (i performed the subtraction operation and got the value before dividing instead of using parentheses, an old RPN habit)

Then you can go back and compare recomputed values to values in different memory locations if something '''''s up.

It's a style of calculation that comes more naturally to people used to working with stacks on HP reverse polish notation calculators (which I prefer but obviously are not allowed on the exam).

[wat]

Hmm . . . Usually if I have something like that happening I check the various worksheets, and possibly recompute things like interest. I also store numbers from intermediate steps in memory locations. So if there are several chunks of calculations together, including two which are a duplication of the same calculation, I store each chunk in a separate memory location and add and multiply them together.

For example, problem 13 in FM-09-05 got me in the form
100*e^(27/300)*e^(189/300) - 100e^(27/300) =(2-e^(189/300))x

So I stored 100*e^27/300 in 7
e^(189/300) in 8
RCL 7 * RCL 8 in 9
2-RCL 8 in 6
then RCL 9 - RCL 7 = / RCL 6 (i performed the subtraction operation and got the value before dividing instead of using parentheses, an old RPN habit)

Then you can go back and compare recomputed values to values in different memory locations if something '''''s up.

It's a style of calculation that comes more naturally to people used to working with stacks on HP reverse polish notation calculators (which I prefer but obviously are not allowed on the exam).

Different strokes for different folks, right?

[mcgruff]

I can't imagine trying to do the exam (either real or practice exam) without a financial calculator if only for the ability to solve for interest when number o payments, payment amount, PV, and FV are known. When it comes to finding PV or FV (e.g., (1-v^n)/i), that's pretty easy to do without the financial calculator, but with some questions, it's just so much easier to throw in what you know and let the calculator figure it out for you then spending a bunch of time doing some pretty messy equations.