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# CFA® Program exam: calculator tutorial for Modified Duration

The exams are around the corner – do you know your stuff? This series of posts in the month leading up to the exam will cover revision tips, summaries and must-knows for students to make sure they’re thoroughly prepared.

In this step-by-step tutorial, we walk you through how to obtain the Modified Duration value using a Texas Instrument BA II Plus financial calculator.

Sample Problem:

A bond pays 6% coupon payments, semi-annually. I

t has 10 years left to maturity and the current market rate is 6.84%.

Calculate the modified duration on the bond.

*Note:

In your BA II Plus Professional calculator dates are entered in the mm.ddyy format. It is useful to use an easy starting date, such as 01/01/2000 and add the time to maturity to it to determine the ending date. For example, in this problem we would need to enter the starting date of 01/01/2000 as 01.0100, and the ending date of 01/01/2010 (10 years later) as 01.0110.

Step-by-step:

[2nd] [9] (“BOND”)

Enter the ‘SDT’ (starting date) as 01.0100

[ENTER] [↓]

Enter the ‘CPN’ (coupon) as “6” (for 6%)

[ENTER] [↓]

Enter the ‘RDT’ (aka redemption date, ending date, maturity date) as 01.0110

[ENTER] [↓]

‘RV’ (redemption value) should be the future value (par value; i.e. 100)

[↓]

‘ACT’ should be blank

[↓]

‘2/Y’ represents payments per year – should be left alone unless payment are annual instead of semi-annual (to change the payment frequency to annual press [2nd] [ENTER] until ‘1/Y’ appears, then hit [ENTER])

[↓]

Enter the ‘YLD’ (yield) as “6.84” (for 6.84%)

[ENTER] [↓]

‘PRI’ should be zero

[↓]

‘AI’ should be zero

[↓]

‘DUR’ or ModDur is calculated for you!

In this problem, ModDur is approx. 7.33.