Using programmable calculators for financial applications

Abstract

Electronic calculations are becoming an indispensable tool for financial practitioners. Several textbooks recommend the use of calculators in finance classes. However, the variety of forms and sizes make it a problem to pick the right choice for a practitioner. Some recent articles have discussed the use of financial calculators and others have attempted to program the Black–Scholes option pricing model in a programmable calculator using 'Reverse Polish Notation' (RPN) logic. Thus practitioners may be required to carry several calculators, for the different types of applications in his day–to–day job. Alternatively, they may carry a laptop computer with a bunch of programs. However, it may often be more convenient and economical to have a pocket calculator that can serve the function equally well. This paper selects a series of economical programmable calculators using algebraic logic, and programs the time value functions as well as the Black–Scholes option–pricing model in the same calculator. It gives the complete programming steps, including a brief theoretical background. Subsequently, it gives an application section in which it takes the reader step by step through the various programs showing the display of the calculator at every step. Thus the reader can check the programming steps and debug for errors if the answers do not match.