# 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

excellent. thank you!!

Very appreciative! Thanks!

thanks ,

Great video!!!

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?

awesome vid, no more confusing formulas

Saved me of horrendous formula manipulations … FANTASTIC EXAMPLES!!

its very helpful

Thank you so much.

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

thank you! very simple and it helped very much

How do I this without a BA II plus calculator?

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

Thanks Joshua

Thanks for the video

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

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!!!!

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.

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

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

Thanks Joshua!

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)

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

Very helpful,thanks

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

thanks Joshua, so helpful…

It's very helpful, thanks man

Thank you very much

Really great Joshua. Thank you.

These really help me on my test! Thank You

Joshua you are my savior!!

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