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June 29, 2026
Mastering advanced calculator techniques is a critical step in your CFA® exam prep. While the exam allows two models, the Texas Instruments BA II Plus calculator (including the Professional version) is the most popular choice due to its user-friendly interface. This guide, based on instructions from CFA expert Jim Maher, walks through the advanced setups and functions you need to know for success on exam day.
Capital budgeting involves assessing the feasibility of projects by summing the present values of their future cash flows.
The Accept/Reject Rule: If NPV 0, accept. If NPV < 0, reject.
IRR Concept: This is the discount rate that makes a project's NPV zero.
Clear Work: Press [CF] → [2nd] → [CLR WORK] to wipe old data.
These functions measure liquidity by determining how long it takes to recover an initial investment.
Warning: The Payback (PB) and Discounted Payback (DPB) functions are only available on the BA II Plus Professional model.
Press [CF] → [2nd] → [CLR WORK].
CF0: Enter initial outlay (as a negative) → [ENTER].
C01: Enter first cash flow → [ENTER] → [↓].
F01: Enter frequency of that flow → [ENTER] → [↓].
Press [NPV] → Enter Interest Rate (I) → [ENTER] → [↓] → [CPT].
Press [IRR] → [CPT].
Your BA II Plus calculator can quickly compute the mean, standard deviation, and variance for a series of returns, whether they are historical data or a probability distribution.
Data Entry: Use the [DATA] (2nd → 7) screen to enter your values.
If given probabilities for returns, they must be entered as whole numbers (e.g., 30 for 30%) in the Y registers.
The Variance Shortcut: Since the calculator doesn't show variance directly, simply press the [x²] key while the standard deviation is on your screen.
Covariance measures how two variables move together. We recommend using memory registers to perform this calculation efficiently.
The most reliable way to calculate covariance is to use the sample standard deviations of two stocks (Sx and Sy) and their correlation coefficient (r).
Enter Stock 1 returns in X and Stock 2 returns in Y via the [DATA] screen.
Go to [2nd] → [STAT] and ensure it is in LIN (Linear) mode.
Store these three values:
Sx (Sample Std Dev of X) → [STO] [1].
Sy (Sample Std Dev of Y) → [STO] [2].
r (Correlation coefficient) → [STO] [3].
The Result: Press [RCL] [1] × [RCL] [2] × [RCL] [3] = Covariance.
BA II Plus calculators feature a built-in [DEPR] (2nd → 4) worksheet that handles both Straight Line (SL) and Double Declining Balance (DDB) methods.
Methods (02:18): Press [2nd] → [SET] to toggle between SL and DB.
Inputs (02:35):
LIF: Useful life.
CST: Original cost.
SAL: Salvage (residual) value.
YR: The specific year you want to analyze.
After entering your data, scroll down to find:
DEP: Depreciation expense for that specific year.
RBV: Reduced (Net) Book Value this year.
RDV: Remaining Depreciable Value.
For finance leases, the balance sheet should reflect the lower of the fair market value of the asset or the present value of the lease payments.
Once you have calculated the Present Value (PV) of the lease, you can use the [AMORT] (2nd → PV) function to track the lease's impact over time:
BAL (02:15): The remaining lease liability shown on the balance sheet.
PRN (02:40): How much the lease liability was reduced that year.
INT (02:45): The portion of the lease payment representing interest expense.
Valuing bonds requires adjusting for compounding frequency and understanding the built-in Bond Worksheet for precise pricing between coupon dates.
Most CFA bond problems involve semi-annual coupons. To value these correctly using the TVM keys ([N], [I/Y], [PV], [PMT], [FV]), you must adjust your inputs to a periodic basis.
Adjustments (01:10):
N: Number of years × 2.
I/Y: Annual market yield 2.
PMT: Annual coupon 2.
Sign Convention (03:40): Enter [PMT] and [FV] as positive (inflows). The computed [PV] will be negative (the price you pay).
Use the [AMORT] ([2nd] → [PV]) worksheet to see how a bond’s carrying value changes over time.
BAL (07:35): The carrying value (book value) of the bond at a specific period.
PRN (07:45): The amount of discount or premium amortized.
INT (07:55): The interest expense (market yield × beginning carrying value).
For problems involving specific dates, clean prices, and accrued interest, use the dedicated Bond Worksheet ([2nd] → [9]).
SDT (09:50): Settlement date (the date you buy the bond).
CPN (10:10): Annual coupon rate (entered as a whole number, e.g., 8 for 8%).
RDT (10:25): Redemption/Maturity date.
RV (10:45): Redemption value (usually 100 as a % of par).
Day Count (11:40): Toggle between ACT (Actual/Actual) or 360 (30/360) using [2nd] → [SET].
Compounding (12:05): Toggle between 2/Y (semi-annual) or 1/Y (annual).
PRI & AI (12:45): Scroll to PRI and press [CPT] for the "Clean Price." Scroll down to AI to find the "Accrued Interest."
Press [2nd] → [BOND].
Enter SDT, CPN, and RDT (Press [ENTER] after each).
Ensure RV is 100.
Set YLD to the market rate → [ENTER].
Scroll to PRI → [CPT].
Scroll down to see AI (Accrued Interest).
Here are the most common BA II Plus calculator error codes and how to fix them:
This usually occurs when calculating IRR or YTM.
The Cause: The calculator uses an iterative process to find the answer and will give up if it takes too many steps. This is often caused by entering cash flows that never change signs (e.g., all positive) or entering a rate that makes the math impossible.
The Fix: Check your [CF] entries. Ensure your initial outlay (CF0) is negative. If the math is correct, try "seeding" the calculation by entering a guess for the interest rate.
This error is similar to Error 5, but specifically for IRR calculations.
The Cause: This happens if the project has no internal rate of return (e.g., the cash flows never "cross" the zero line) or if you have multiple sign changes in your cash flow series.
The Fix: Review your [DATA] or [CF] screen. Ensure your signs (+/-) accurately reflect inflows and outflows.
If your math is perfect but the answer is wrong, check these three common mistakes:
The BGN Indicator: Is "BGN" visible in the top right? If so, your calculator is in Annuity Due mode. Press [2nd] → [BGN] → [2nd] → [SET] to go back to END mode.
Lurking Cash Flows: Did you clear the worksheet? Pressing [ON/OFF] does not clear your Cash Flow (CF) or Statistics (DATA) worksheets. You must press [2nd] → [CLR WORK] inside the worksheet.
P/Y Setting: Press [2nd] → [P/Y]. It should almost always be 1. If it says 12, your calculator is dividing your interest rates by 12 automatically, which will ruin Bond and Equity valuations.
Worksheet Memory: Remember that [CLR TVM] does NOT clear the [CF], [DATA], or [DEPR] registers. You must use [2nd] → [CLR WORK] within each specific worksheet.
Whole Numbers: When entering probabilities or percentages in the Statistics or ICONV modes, enter them as 10, not 0.10.
Standardize: We recommend working in whole numbers for returns to keep interpretations simple and less prone to decimal-place errors.
This guide was compiled using the CFA Video Library series hosted by Jim Maher. For refresher on basic setups like AOS mode and TVM sign conventions, check out our Basic TI BAII Plus Calculator Tips article.
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