CFA CFA General calculating periodicity

# calculating periodicity

• Author
Posts
• mitch895
Participant
• CFA Charterholder
12

Hi all,

A (hopefully) really simple question. I’m trying to convert yields from one period to another using the BA11 Plus. I.e., converting say a 10% p.a. rate into a quarterly or monthly rate. I’m sure there is some really easy and obvious solution to this, but I’m not overly familiar with the calculator (yet).

Any words of wisdom are much appreciated!

Cheers

• hairyfairy
Participant
• Undecided
6

Wouldn’t it be (10%)^(1/4) for quarterly, and (10%)^(1/12) for monthly?

• hairyfairy
Participant
• Undecided
3

@vincentt oh yeah that’s right, 1.1 instead of 0.1. My noob mistake. ðŸ˜€

• mitch895
Participant
• CFA Charterholder
3

Thanks guys.

It’s the compounded rate I’m looking for, so the r^periods works well!

Cheers!

• vincentt
Participant
• CFA Level 3
1

If not mistaken I think it depends on whether they wanted a simple or compounded rate.

Based on 10%.

Simple Rate:
Quarterly
10% * 0.25 = 2.5%

Monthly
10% / 12 months = 0.833%

Compounded Rate:
Quarterly (3 months / 12 months in a year = 0.25)
1.1 ^ 0.25 –> in your BA II Plus type in 1.1 -> y^x (the button above the number 9) -> 0.25

you’ll get 1.0241 which translate to 2.41%

Monthly

1.1 ^ 0.0833 ( 1/ 12 = 0.0833)
= 1.00797
or 0.8%

For compounded rate it’s slightly more complicated because you can’t just use 10 ^ 0.25 you would need to use 1.1 instead (something like 2% = 1.02).

• vincentt
Participant
• CFA Level 3
0

@hairyfairy haha no worries I sometimes just write 10% as I’m too lazy to write 1 + rate or 1 + 10% so 10% is sort of understandable when it comes to power or root ðŸ˜›