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Every banker owns a financial calculator. She carries the calculator with her to every meeting because she never knows when she may need it and no other calculator can do the work of a financial calculator.

The most popular financial calculators are the Hewlett-Packard HP-10B and the Texas Instruments BA II. However, all financial calculators have the same basic functions.

## Ways to Calculate Bonds With a Financial Calculator

The hardest part about using a calculator is knowing which variables to input. Let’s walk through an example to help illustrate.

Let’s say you need to find the bond price for a company that issued 11 year, semi-annual bonds one year ago at a coupon rate of 8.25 percent. The yield to maturity (YTM) on the bonds is 7.10 percent.

The main labels are payment amount (PMT), future value of the bond (FV), number of periods (N), and interest rate (I/Y). PMT is the amount the bonds pay. The bonds pay semi-annual so you need to divide the coupon by 2.

This is 8.25/2 = 4.125. Multiply this by the par value to get the payment. The payment is 41.25 (.04125 x \$1,000). The number of periods is 20 (two, 10-year periods). The par value is assumed to \$1,000 which is the FV and the interest rate is 3.55 (7.1/2).

### Plug These Values Into The Calculator and Click PV or CPT PV for The Price

The price should be \$1,081.35.

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