Using HP 10bII for Interest Rate Conversions

Which interest rate would give you better returns as an investor?

• Enter 4.25 and press [Shift] [NOM%]
• Enter 4 and press [Shift] [P/YR] (4 times a year)
• [Shift] [EFF%] 4.32 (compounded annually or 12 months)
• Enter 4.15 and press [Shift] [NOM%]
• Enter 12 and press [Shift] [P/YR]
• Press [Shift] [EFF%] 4.23 (compounded annually or 12 months)

The second option 4.25% (Quarterly), has better return as an investor.

Calculate equivalent semiannual rate?

• Enter 5 and press [Shift] [NOM%]
• Enter 12 and press [Shift] [P/YR] (compounded annually)
• Press [Shift] [EFP%]
• Display 5.12, and now we need to work backwards
• Enter 2 and press [Shift] [P/YR] (set to semi annual or twice a year)
• Press [Shift] [NOM%]
• Display 5.05 (is the same as compounded semi annually)

Answer is 5.05% for semiannual rate.