• Financial calculators are used to calculate the different variables in bonds, stocks and other financial instruments. They require the input of different variables, then will solve for the unknown. The financial calculator’s main benefit is time savings. It allows users to only input variables instead of plugging them all into an equation and then solving for the unknown manually.
  
  

Time Value of Money

• The time value of money row on a financial calculator includes the keys N, I/Y, PV, PMT and FV. N stands for the number of periods in the life of a security, and I/Y denotes the interest rate per period. PV stands for present value, PMT stands for any coupon payments that are made at the end of each period and FV stands for future value or the value at maturity. On some calculators, the I/Y button is split into two buttons: APR, meaning annual interest rate, and P/Yr, meaning number of periods per year. In this, case the N input means number of years.
  
  Aside from the basic input methods, there are a few things to remember when using the time value of money functions. First, all inputs but one must be entered before an output will be given. Next, PV and FV will always have signs opposite each other; one will be positive and one negative. That is because the positive value will represent the cash inflow of selling a security or receiving face value at maturity, whereas the negative value will represent the cash outflow of purchasing a security or making the payment at the maturity date. Finally, there is usually a specific button to clear the TVM inputs without clearing any other calculator settings or saved inputs. Its location varies between calculators.
  
  

Cash Flows

• The cash flow button, denoted by CF, is the input required to calculate net present value and internal rate of return. Net present value is denoted by NPV; this calculation also requires the input of an interest rate once all cash flows have been added and the NPV button has been pressed. The cash flow button is used for making calculations involved with securities that have variable coupon payments. There are a few things to keep in mind when inputting numbers under the cash flow button. The cash flow at time zero must have the opposite sign of all future cash flows. Additionally, when a coupon payment remains the same from one period to another, the frequency input can be used. This saves time when inputting values.
  
  

Decimal Places

• Different types of financial calculations require differing amounts of decimal spaces. An excellent example of this is calculating foreign exchange values. Foreign currencies are valued to the fourth decimal place rather than just two. To adjust the number of significant figures, first find a button that is marked by the word “format” or something similar. It will be a secondary function, so the word will be located above a button rather than on it. Then press the 2nd button followed by the format button. The prompts will guide you through the remainder of the process.