Question 1
Ada borrows $20,000, repaid by level payments at the end of each year for 5 years at an annual effective interest rate of 6.0%.
Calculate the level payment.
Calculators allowed on Exam FM, and how to set up a BA II Plus
Only six Texas Instruments models are approved for SOA exams. For Exam FM the BA II Plus matters most: its N, I/Y, PV, PMT and FV keys solve annuity, loan and bond questions in seconds.
| Approved models | BA-35, BA II Plus, BA II Plus Professional, TI-30Xa, TI-30X II (IIS solar or IIB battery), TI-30XS MultiView (or XB battery) |
|---|---|
| How many | More than one is allowed, with extra batteries, if each is on the list |
| Memory | You must show the memory has been cleared on the BA II Plus, BA II Plus Professional, TI-30X II and TI-30XS MultiView |
| Not allowed | Calculator covers, instructions and any other model |
Set up a BA II Plus after it is cleared
- Payments per year: press 2nd, P/Y, 1, ENTER, so that I/Y is the rate per period.
- Decimals: press 2nd, FORMAT, then a number of places and ENTER.
- Check END or BGN: 2nd, BGN shows the setting, and 2nd, SET switches it.
- Before each question: 2nd, CLR TVM.
Signs
Money paid out is negative and money received is positive. To find a bond's yield, enter the price as a negative PV and the coupons and redemption as positive PMT and FV. Two values with the same sign give an error.
Bringing two
You may bring more than one approved calculator. A BA II Plus for time-value questions and a TI-30XS MultiView for everything else covers both jobs: the MultiView shows whole expressions and lets you scroll back through earlier lines.
Try 2 questions
Question 2
A 10-year bond has a face amount of $1,000 and pays semiannual coupons at an annual coupon rate of 6.0% and is redeemable at par. It is bought for $925.00.
Calculate the yield, as a nominal annual rate convertible semiannually.
Next step
Questions people ask
Can you use a BA II Plus on Exam FM?
Yes. The BA II Plus and the BA II Plus Professional are both on SOA's approved list.
Can you use a TI-84 on Exam FM?
No. Graphing calculators are not approved. Only the BA-35, BA II Plus, BA II Plus Professional, TI-30Xa, TI-30X II and TI-30XS MultiView are allowed.
What should P/Y be on a BA II Plus for Exam FM?
Set P/Y to 1 and enter the interest rate per period as I/Y. Then N is simply the number of payments, whatever their frequency.