CFA® Level 1 Calculator Tips: BA II Plus vs HP 12C

Your Level 1 calculator is the one piece of equipment you bring into the exam with you, and a long list of question types runs through it: time value of money, bond pricing, net present value, internal rate of return, and basic statistics. This guide covers which models are permitted, how the BA II Plus and the HP 12C differ, the settings worth changing before you study, and the keystroke traps that turn a correct method into a wrong answer.

Which calculators are allowed on the Level 1 exam

CFA Institute's calculator policy permits two families of calculator:

• Texas Instruments BA II Plus, including the BA II Plus Professional
• Hewlett Packard 12C, including the HP 12C Platinum, the 12C Platinum 25th anniversary edition, the 12C 30th anniversary edition, and the HP 12C Prestige

Nothing else is permitted, and that includes a phone. You need to bring your own, because the policy does not allow borrowing one at the test center or from another candidate. Calculators are inspected before the exam begins. Calculator covers and loose batteries are permitted in the testing room. Instruction manuals are not.

Policies can change between exam windows, so read the current calculator policy on CFA Institute's website before exam day.

BA II Plus vs HP 12C: what actually differs

Both calculators are permitted, and both handle time value of money, cash flow, and statistics calculations. The real difference is how you enter a calculation.

The BA II Plus works like a standard algebraic calculator once you switch on AOS (covered below). You key 5 + 3 x 2 = and get 11. The time value of money keys (N, I/Y, PV, PMT, FV) sit together on the third row, and the calculator has dedicated worksheets for cash flows, amortization, bonds, and statistics.

The HP 12C uses Reverse Polish Notation, usually shortened to RPN. There is no equals key. You enter the first number, press ENTER, enter the second number, then press the operation: 5 ENTER 3 + returns 8. Long expressions need fewer parentheses once the method is familiar, but it takes deliberate practice if you have never used RPN before.

So the useful question is not which calculator is better. It is which one you can use without thinking by exam day.

• If you have never used either, the BA II Plus behaves like the calculators you already know, once AOS is on.
• If you already use an HP 12C comfortably, switching close to the exam adds a new skill to practice at the worst possible time.
• Whichever you choose, do every practice question on that same calculator from now on.

BA II Plus settings to change before you study

The BA II Plus ships with a few defaults worth changing. Change these once. They stay set when you turn the calculator off.

1. Set periods per year (P/Y) to 1. The factory setting is 12, which means the calculator quietly divides the interest rate you enter by 12. Press [2ND] [I/Y], type 1, press [ENTER], then [2ND] [CPT] to quit. C/Y updates to 1 with it. From then on, you convert to per-period values yourself: for monthly payments, divide the annual rate by 12 and multiply the years by 12 before you key them in.

2. Set decimals to floating. Press [2ND] [.] to open the FORMAT menu, type 9, and press [ENTER]. The display then shows as many decimal places as the answer needs, so you round once at the end instead of in the middle.

3. Switch from chain to AOS. In the same FORMAT menu, press the down arrow until the display shows Chn, then press [2ND] [ENTER] to change it to AOS. In chain mode the calculator works strictly left to right, so 5 + 3 x 2 = returns 16. AOS follows the standard order of operations and returns 11.

4. Know where BGN lives. [2ND] [PMT] opens the payment timing setting, and [2ND] [ENTER] toggles between END and BGN. When BGN is on, a small BGN indicator appears on the display. The default is END.

One warning: [2ND] [+/-] followed by [ENTER] resets the calculator to its factory defaults. That puts P/Y back to 12 and the calculation method back to chain. If you ever reset it, redo steps 1 to 3.

HP 12C settings to change before you study

1. Decimal places. Press [f] followed by a digit to set how many decimals the display shows. [f] [9] shows nine. The calculator keeps full precision internally either way.

2. Payment timing. [g] [7] sets BEGIN mode, and BEGIN appears on the display. [g] [8] sets END mode.

3. There is no P/Y setting. The HP 12C always treats n and i as per-period values. For monthly problems, the [g] [n] shortcut multiplies years by 12 and stores the result in n, and the [g] [i] shortcut divides an annual rate by 12 and stores it in i.

4. Clear the financial registers between problems. [f] [x<>y] clears n, i, PV, PMT, and FV.

5. Know how it solves for n. When the HP 12C computes n, it returns a whole number, rounded up. If a question needs a fractional number of periods, check the answer another way.

Five keystroke traps worth drilling

1. Leftover values in the time value of money registers. N, I/Y, PV, PMT, and FV keep their values after you finish a problem. If the next problem has no payment and you do not clear the registers, the old PMT gets used. Clear them before every new problem: [2ND] [FV] on the BA II Plus, [f] [x<>y] on the HP 12C. On the BA II Plus, [CE/C] alone does not clear them.

2. The sign convention. Both calculators treat money going out and money coming in as opposite signs. Enter amounts paid out as negative and amounts received as positive. If you enter PV and FV with the same sign, no payment, and then solve for the rate, the BA II Plus shows Error 5 and the HP 12C shows an error message too. That error is a signal to check signs, not a broken calculator.

3. Payment timing left on the wrong setting. BGN or BEGIN stays on until you switch it off. If you set it for an annuity due problem and forget, every ordinary annuity problem after that comes out wrong by a factor of (1 + r). Read the timing words in the question (start of each period, end of each period) before you touch the calculator, and glance at the display for the BGN or BEGIN indicator.

4. Cash flow worksheet frequencies. On the BA II Plus cash flow worksheet, every cash flow has a frequency (F01, F02, and so on) that defaults to 1. A repeated cash flow can be entered once with a higher frequency, but a frequency left over from a previous problem changes NPV and IRR. Clear the worksheet with [2ND] [CE/C] while you are inside it. On the HP 12C, the [g] [FV] key (Nj) sets how many times a cash flow repeats, and [f] [x<>y] clears it along with the other financial registers.

5. Rounding in the middle. If you round an intermediate result and carry the rounded figure forward, the final answer can drift away from every answer choice. Keep full precision until the last step, which floating decimals on the BA II Plus make easy.

A worked example on both calculators

Here is a hypothetical. What is the present value of $1,000 received at the end of each year for three years, discounted at 5% a year?

On the BA II Plus, with P/Y set to 1 and END mode on:

1. [2ND] [FV] to clear the registers
2. 3 [N]
3. 5 [I/Y]
4. 1000 [PMT]
5. 0 [FV]
6. [CPT] [PV]

The display shows -2,723.248029, or about -2,723.25. The result is negative because it is the amount paid today to receive the three positive payments.

On the HP 12C, in END mode:

1. [f] [x<>y] to clear the registers
2. 3 [n]
3. 5 [i]
4. 1000 [PMT]
5. 0 [FV]
6. [PV]

The display shows about -2,723.25 as well.

Now change one fact: the payments arrive at the start of each year. Switch to BGN on the BA II Plus or BEGIN on the HP 12C, then solve for PV again. The answer becomes about -2,859.41, which is 2,723.25 x 1.05. Each payment is received one period earlier, so each is discounted one period less. Then switch back to END before the next problem.

How to practice so the keystrokes stick

Treat calculator fluency as part of studying, not a separate chore.

• Work every practice question with the calculator you will bring, including the ones you could do in your head.
• When a wrong answer comes from a keystroke slip rather than the concept, write it down in your error log in one line: what you pressed and what you should have pressed. Repeated slips are then easy to spot.
• Sit at least one timed set with the calculator in hand. A Level I exam session is 90 questions in 135 minutes, so timed practice shows whether your keystrokes hold up under the clock.
• The week of the exam, check your settings once more: P/Y at 1 (BA II Plus), floating decimals, AOS (BA II Plus), and END mode. Put a fresh battery in and pack a spare.

Practice with the calculator you will bring

The free 90-question Level 1 mock exam at Totten Prep uses a 135-minute timer, the length of one exam session, and gives a score by topic with an explanation for every question. It takes a free account. Sit it with the same calculator you plan to use on exam day.

For the bigger picture, the six-month Level 1 study plan and how many hours to study for Level 1 cover where the calculator work fits in.

FAQ

Which calculators are allowed on the Level 1 exam? CFA Institute's policy permits the Texas Instruments BA II Plus (including the BA II Plus Professional) and the Hewlett Packard 12C (including the 12C Platinum, the Platinum 25th anniversary edition, the 30th anniversary edition, and the 12C Prestige). Check the current policy on CFA Institute's website before exam day.

Should I set P/Y to 1 on the BA II Plus? Setting P/Y to 1 keeps the calculator from dividing your rate by 12 in the background. You then enter per-period values yourself, so the rate on screen is always the rate the calculator uses.

Why does my BA II Plus give the wrong answer on a time value of money question? The usual causes are leftover values in the registers, P/Y still at 12, BGN mode left on, or a sign error. Clear the registers with [2ND] [FV] and check the display for the BGN indicator before you start.

Is the BA II Plus Professional worth buying over the standard BA II Plus? Both are permitted. The Professional adds some extra worksheet functions, but the time value of money and cash flow keys work the same way on both models.

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