BA II Plus – Nominal & Effective Rate Conversions


Hello and welcome! In this video I will be talking about interest
conversions using the BA II plus calculator I’m Joshua Emmanuel. We know that
interest rates could be compounded annually, semi-annually, quarterly, monthly or
even daily. The purpose of this video is to
show how to convert among these different compounding
frequencies using the BA II plus
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calculator. The interest conversion worksheet on the
BA II Plus calculator converts interest rates between nominal
rate and effective annual rate. The nominal rate is basically the interest rate not
compounded annually. It is also known as the annual
percentage rate APR. The effective annual rate simply implies annual compounding. That is, once a year. The
three variables used on the interest conversion worksheet can be
found by pressing 2ND ICONV that is interest conversion on the BA II Plus calculator. So the
three variables are Nominal, NOM; if you scroll scroll up C/Y which is the compounding frequency
per year; if you scroll up again, Effective which
is the effective annual interest rate. Since there are
only three variables, to navigate through them is pretty
straightforward. Pressing the Up Arrow ↑ once is equivalent to
pressing the Down Arrow ↓↓ twice and vice versa. So if I press the Up Arrow ↑
once here, it goes straight to nominal. If I press
the down arrow twice ↓↓ it goes to C/Y here. If I go again
to Nominal and I press the Up Arrow once, it goes back to C/Y. Next we’ll look at a few
examples. Let us calculate the effective annual rate, which simply means that
interest rate is compounded once a year. In this
example we will calculate the effective annual rate for 10% compounded semi-annually. Press 2ND ICONV it shows NOM=, enter 10 press the ENTER button scroll up, C/Y semi-annually means it’s compounded twice a
year so press C/Y=2 ENTER scroll up again and compute effective EFF. This shows us that 10%
compounded semiannually is equivalent to 10.25% effective annual interest rate or 10.25% compounded annually. Finding nominal annual interest rates given effective
rates. In this example, given an effective rate of 8.6 percent we want
to find the nominal rate compounded monthly and then compounded
quarterly. So start by going to 2ND interest
conversion ICONV. Since we have the effective rate we have
to scroll up to Effective or like I said you can just scroll down
once and then you’ll be in the effective
input mode. Enter the effective rate 8.6 ENTER scroll down C/Y is 12 for monthly compounding ENTER, scroll down and compute nominal. So an effective annual rate of 8.6 percent is equivalent to 8.2785% compounded monthly. If you want to find the nominal rate
compounded quarterly scroll up, change C/Y to 4 ENTER, scroll back down and compute
Nominal. So 8.6 percent compounded annually is equivalent to 8.3358 compounded quarterly Finding Equivalent Rates In this example we want to convert
interest rate from one compounding frequency to another. In this case, we want to find
the nominal interest rate compounded monthly that is
equivalent to 7.53 saying compounded semi-annually. So we press 2ND
ICONV our nominal rate is 7.5 ENTER scroll up we change C/Y to 2 because its
compounded semiannually ENTER, scroll up again computer effective (EFF). So this is the effective rate for 7.5
percent compounded semiannually but we want the
monthly compounding rate so we scroll back down and change our C/Y to
12 ENTER, scroll down to again and compute nominal. So 7.5% compounded semiannually is equivalent to 7.3854% compounded monthly. And that’s how to use the be a two-plus
calculated for interest conversions. Thank you!
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in the cell to use the Dea to post a polluted for
interest combinations think it

32 comments on “BA II Plus – Nominal & Effective Rate Conversions”

  1. Helen Dakin says:

    excellent.  thank you!!

  2. Tengwar Teacher says:

    Very appreciative! Thanks!

  3. Jose A says:

    thanks ,

  4. Matthew Healy says:

    Great video!!!

  5. enjoythesilence790 says:

    Thank you this was very helpful. But are you not missing the last step in the last example? Once you got 7.39, don't you have to divide by 12 to get the compounded monthly rate?

  6. Tony says:

    awesome vid, no more confusing formulas

  7. Don Hall says:

    Saved me of horrendous formula manipulations … FANTASTIC EXAMPLES!!

  8. 周沁哲 says:

    its very helpful

  9. Tosin Bello says:

    Thank you so much.

  10. Christina Mills says:

    Thank you SO much! I have been struggling with the formulas for a week. SO helpful!

  11. Cheryl Maloney says:

    thank you! very simple and it helped very much

  12. Sayef Ahmed says:

    How do I this without a BA II plus calculator?

  13. latte4suzy says:

    Thank you for your instruction! I just purchased this calculator for my classes and your videos are so easy to understand.

  14. Deeksha A says:

    Thanks Joshua

  15. michelle lo says:

    Thanks for the video

  16. amit singh says:

    It was very helpful indeed. Great that you have shown through multiple examples covering all scenarios

  17. Michael Yeung says:

    Joshua, you are a life saver! After watching your very detailed and logical tutorial, I am now able to complete my mortgage questions for my real estate course without having to buy the course recommended calculator. Thank you so much!!!!

  18. Alisha McBride says:

    You are awesome!!! I gave up on figuring out the problem. Then tried one more thing and went to Google. Lucked up on your video and this is amazing! I got it right. Thank you very much.

  19. wirechair says:

    is there any way to cpt c/y if you have the eff and nom?

  20. Yani Wang says:

    Thank you, the best tutorial I have found, clearly demonstrated, clear voice, easy to follow!

  21. clifford says:

    Thanks Joshua!

  22. Sydsteradventures says:

    will this work for comparing rates? I have a question about comparing the real rate at 1.5% APR, compounded monthly and inflation expecting to be 2.5% APR compounded monthly, and the question asks for the nominal rate (compounded monthly)

  23. thesexyhitman1 says:

    Great video , thanks have an exam coming up this will help me a lot

  24. Eliot Maine says:

    Very helpful,thanks

  25. Michel Marcelino says:

    Hi Joshua, you have saved my ass on my exams.

  26. mudassir salik says:

    thanks Joshua, so helpful…

  27. millie111001 says:

    It's very helpful, thanks man

  28. Rama Krishna says:

    Thank you very much

  29. Weekend Explorer says:

    Really great Joshua. Thank you.

  30. Gemark Quitoriano says:

    These really help me on my test! Thank You

  31. thoughtsthroughsound says:

    Joshua you are my savior!!

  32. tituscaesar says:

    so, so helpful! thank you so much! you presented this very well 🙂

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