CFA CFA General calculating periodicity

calculating periodicity

  • This topic has 5 replies, 3 voices, and was last updated Jul-17 by mitch895.
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    • mitch895
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      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
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      Wouldn’t it be (10%)^(1/4) for quarterly, and (10%)^(1/12) for monthly?

    • vincentt
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      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).

    • hairyfairy
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      @vincentt oh yeah that’s right, 1.1 instead of 0.1. My noob mistake. 😀

    • vincentt
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      @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 😛

    • mitch895
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      Thanks guys.

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

      Cheers!

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