Your calculator is one of your most important tools on the FRM exam. With 100 questions to answer in 4 hours (2.4 minutes per question), efficient calculator use can save you valuable time and reduce errors. Yet many candidates don't fully master their calculator, leaving points on the table.
This comprehensive guide covers everything you need to know about using the Texas Instruments BA II Plus for the FRM exam—from essential setup to advanced functions—with step-by-step keystroke instructions and practice problems.
Approved Calculators for FRM
GARP has strict rules about which calculators are permitted on the FRM exam. Only these models are allowed:
| Calculator | Versions Allowed | Recommendation |
|---|---|---|
| Texas Instruments BA II Plus | Standard and Professional | ✓ Recommended |
| Hewlett Packard 12C | Standard, Platinum, Prestige, Gold | Good alternative |
Unless you're already proficient with the HP 12C, we recommend the BA II Plus. It has a more intuitive algebraic entry system (vs. HP's Reverse Polish Notation), dedicated statistical functions that are easier to use, and is the calculator most FRM prep materials reference. The Professional version has a few extra features but the standard BA II Plus is sufficient for the exam.
BA II Plus vs HP 12C
| Feature | BA II Plus | HP 12C |
|---|---|---|
| Entry Method | Algebraic (standard) | RPN (Reverse Polish Notation) |
| Learning Curve | Easy | Steep (if unfamiliar with RPN) |
| Statistics Functions | Dedicated worksheet | Less intuitive |
| Bond Calculations | Built-in worksheet | Manual calculation |
| Price (approx.) | $35-50 | $70-120 |
| Prep Material Support | Most common | Less common |
Essential Setup & Settings
Before you start studying (and before the exam), configure your calculator with these essential settings. Incorrect settings are a common source of errors!
The most common calculator error is forgetting to set P/Y and C/Y to 1. The default is 12 (monthly), which will give wrong answers if you're inputting annual rates. Always verify these settings before starting any TVM calculation. If you get a strange answer, check P/Y first!
Basic Operations & Memory
Key Layout Overview
The BA II Plus has three types of key functions:
- Primary functions: Printed directly on keys (white text)
- Secondary functions: Accessed with 2ND key (yellow text above keys)
- Third functions: Some keys have third functions (rarely used for FRM)
Memory Functions
The BA II Plus has 10 memory slots (M0-M9). Memory is invaluable for storing intermediate results.
Clearing Functions
Time Value of Money (TVM)
TVM calculations are fundamental to the FRM exam. Master these keys:
The BA II Plus uses cash flow sign conventions: cash outflows are negative, cash inflows are positive. If you invest $1,000 today (outflow), enter PV as -1000. If you receive $1,000 (inflow), enter it as positive. Consistent sign usage prevents errors and strange results.
Statistical Functions
The BA II Plus has a dedicated statistics worksheet essential for FRM calculations involving mean, standard deviation, and regression.
Accessing the Statistics Worksheet
Entering Data
In the DATA worksheet, you enter X values (and optionally Y values for regression):
- X01, X02, X03... = Your data points
- Y01, Y02, Y03... = Second variable (for regression)
- Use ↓ and ↑ to navigate between entries
- Press ENTER after each value
x̄ (mean) = 5.8
Sx (sample std dev) = 5.07
σx (population std dev) = 4.53
Statistics Output Variables
| Display | Meaning | FRM Application |
|---|---|---|
| n | Number of data points | Sample size |
| x̄ | Mean of X values | Expected return, average |
| Sx | Sample standard deviation | Volatility estimate (n-1 denominator) |
| σx | Population standard deviation | Volatility (n denominator) |
| ΣX | Sum of X values | Total return |
| ΣX² | Sum of X² values | Used in variance calculations |
Bond Calculations
The BA II Plus has a dedicated bond worksheet that's extremely useful for FRM fixed income questions.
Accessing the Bond Worksheet
Bond Worksheet Variables
| Variable | Description | Input Format |
|---|---|---|
| SDT | Settlement date | MM.DDYY (e.g., 1.1525 for Jan 15, 2025) |
| CPN | Annual coupon rate | As percentage (e.g., 6 for 6%) |
| RDT | Redemption (maturity) date | MM.DDYY |
| RV | Redemption value | Per $100 face (usually 100) |
| ACT/360 | Day count convention | Toggle with [2ND] [ENTER] |
| 2/Y | Coupons per year | Usually 2 for semi-annual |
| YLD | Yield to maturity | As percentage |
| PRI | Clean price | Per $100 face |
| AI | Accrued interest | Per $100 face |
Cash Flow & NPV/IRR
The Cash Flow worksheet handles uneven cash flows—essential for NPV, IRR, and project valuation questions.
Accessing the Cash Flow Worksheet
Cash Flow Variables
- CF0: Initial cash flow (usually negative for investment)
- C01, C02, C03...: Cash flows in periods 1, 2, 3...
- F01, F02, F03...: Frequency (how many times each cash flow occurs)
Advanced Functions
Natural Logarithm (ln) and Exponential (ex)
Essential for continuous compounding, Black-Scholes, and many FRM formulas.
Linear Regression
The statistics worksheet also provides regression capabilities—useful for beta calculations and hedging ratios.
After entering X and Y data in the DATA worksheet, the STAT worksheet shows:
- a (intercept): y-intercept of regression line
- b (slope): Slope coefficient (beta in CAPM context)
- r: Correlation coefficient
Time-Saving Shortcuts
These shortcuts can save valuable seconds on exam day:
When solving similar problems, you don't need to clear TVM and re-enter everything. The calculator remembers previous inputs. Just change the variable(s) that differ and compute the new answer. This is especially useful for sensitivity analysis questions (e.g., "What if the rate changes to 7%?").
Exam Day Tips
Remove any calculator cover or case before the exam. Testing centers may not allow covers on your desk. Practice using your calculator without the cover so it feels natural on exam day.
Practice Problems
Practice these problems until calculator operations become automatic:
Frequently Asked Questions
GARP allows only Texas Instruments BA II Plus (Standard or Professional) and Hewlett Packard 12C (Standard, Platinum, Prestige, or Gold). No other calculators, including graphing calculators, smartphones, or computer apps, are permitted.
The Standard version is sufficient for the FRM exam. The Professional version adds features like more cash flow entries and additional calculations, but these aren't necessary for exam success. Save money and buy the Standard version.
The most common issues are: (1) P/Y and C/Y not set to 1 - verify with [2ND][I/Y]; (2) Wrong mode - check END vs BGN mode; (3) Sign errors - ensure cash outflows are negative; (4) Leftover values - always clear TVM before new problems with [2ND][FV].
Policies vary by testing center, but many do not allow calculator covers on your desk during the exam. Remove the cover before the exam starts. Practice using your calculator without the cover so it feels natural on exam day.
Bring a backup. Most testing centers allow you to have two approved calculators. If your primary calculator fails and you don't have a backup, alert the proctor immediately—but they cannot provide a replacement. Don't risk it; always bring a second calculator.
The BA II Plus doesn't have a built-in duration function. You'll need to calculate duration manually using the formula or TVM functions. For modified duration, you'll calculate the price change for small yield changes. This is why understanding the concepts, not just calculator buttons, is essential.
Calculator proficiency comes from practice, not memorization. Use your calculator for EVERY practice problem during your FRM preparation. By exam day, keystrokes should be automatic—you shouldn't have to think about which buttons to press. The goal is to focus your mental energy on solving the problem, not operating the calculator.
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