






          



                                Your Financial Partner
                                   Version 3.2 CPP
                                    April 15, 1993
                         (c) 1986 - 1993, Marc R. Feldesman 
                                & Flying Pig Software
                                 All Rights Reserved


               "Your  Financial Partner" grew  out of frustration  with the
          complexity  and expense of  many of today's  financial management
          programs.  There  is nothing in "Your Financial  Partner" that an
          enterprising  user, armed with  a solid knowledge  of spreadsheet
          macro  programming, couldn't do in spreadsheets like Lotus 1-2-3,
          Quattro  Pro,  or  Excel.    However,  "Your  Financial  Partner"
          computes answers to common financial  questions in an easy to use
          format.   My  idea was  to produce  a simple,  menu-driven, self-
          documenting, "Shareware" program  that would address most  of the
          financial questions that ordinary people pose.  

               Version 3.0CPP represented the first major revision of "Your
          Financial  Partner" since  1989.    The  program  was  completely
          rewritten  in C++  and sports  a  new user  interface that  makes
          better use of color and windows;  it also supports a mouse.   New
          financial calculations include  a substantially  expanded set  of
          loan functions with a handy  loan calculator that also doubles as
          an  annuity  calculator,  improved  loan  refinancing   and  loan
          acceleration analysis, enhanced future value functions, and a new
          set  of bond  calculations.    Version 3.1  added  a function  to
          calculate the  annualized yield on  investments.    This restored
          the  Internal Rate of  Return function, present  in version 2.29,
          but dropped from Version 3.0CPP.   The new IRR function, tailored
          specifically  for   security  yields,  allows   annualized  yield
          calculations  to be computed  on time periods as  short as 1 day,
          and handles  up to 24 positive and  negative cash flows.  Version
          3.11  was a  maintenance release  that  added dates  to the  loan
          amortization schedules.  Version 3.2  adds the  ability to  reuse
          input; it also fixes a bug in the printer initialization routines
          that affected Panasonic and some  Epson printers. All Version 3.*
          releases continue to be largely self-documenting; the manual that
          follows  is  intended  to  supplement  the  program  and  provide
          information about possible financial circumstances where specific
          functions might be useful.

          Shareware:
          __________

               "Your  Financial  Partner"  is  distributed as  "Shareware".
          "Shareware"  is  a class  of  software  that is  made  accessible
          through  various  media  (local  and  national  bulletin  boards,

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          friends, commercial vendors) on a "try before you buy" basis.  It
          is not free software nor is it public domain.  What distinguishes
          "Shareware" from "Freeware" is that we "Shareware" authors expect
          to be  compensated for  our work,  unlike "Freeware"  authors who
          make   their   programs   available   with  no   expectation   of
          compensation.    "Shareware"  authors are  neither  altruists nor
          fools.  We believe that the myriad of available software packages
          (public  domain, freeware,  shareware,  and  commercial) make  it
          nearly  impossible to determine  in advance whether  a particular
          package  meets  your  needs.    With  "Shareware"  you  have  the
          opportunity to "try before you  buy."  A fully functional version
          of  "Your  Financial Partner"  is  thus made  available  for your
          evaluation for a reasonable length of time (30 days).  If, at the
          end  of this  30-day trial period,  you find  that it  meets your
          needs, you are expected to register the program by mailing in the
          registration form along with the proper registration fee ($29.95)
          to  the address  listed  in the  back of  this  manual. If  "Your
          Financial Partner" does not meet  your needs, you are expected to
          erase  the program  from  your disks  and  discontinue using  it.
          Whether  you register the  program or not  you are free  to share
          this program with others provided that the entire program and its
          documentation in its original compressed form are made available.

          Hardware Requirements:
          ______________________

               The program requires an IBM-compatible computer (PC, XT, AT,
          386, or 486) with MS DOS 3.3 or higher, a minimum of 384K of RAM,
          and a floppy  disk drive.  A printer is optional; however, if you
          want hard-copy of  any of the program's  output, you will need  a
          printer.   The program makes  no special demands on  the printer.
          Any 80-column text printer will do.

               For those who use Windows as their primary operating system,
          "Your Financial Partner" will run  as a DOS program under Windows
          3.1.   It runs  successfully both  in the  foreground and  in the
          background.   It has  not been tested  with Windows  3.0; however
          since  it makes  no  Windows calls,  there  is no  reason  why it
          shouldn't run under any version of Windows (or OS/2).  

          Program Installation and Operation:
          ___________________________________

               The program is distributed as a self-extracting archive file
          created  using the  public domain  program LHA.   The  archive is
          called FINPART3.EXE.   Version 3.2CPP  is too large  to run on  a
          360K  diskette, even  though the  archived  version is  sometimes
          distributed on  a  360K  diskette.   Therefore,  to  extract  the
          executable version of "Your Financial  Partner" (FINPART.EXE) you
          need to copy FINPART3.EXE to a diskette with a formatted capacity
          greater than 360K (i.e. 720K, 1.2MB, or 1.44MB) or to a hard disk
          (preferably in its  own subdirectory) and type  FINPART3 [enter].

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          This  will cause  the  extraction  routine  to  unpack  Financial
          Partner's executable program (FINPART.EXE) and its documentation.
          Once you have unpacked the program, it is ready to run.  To print
          the documentation, type  "copy finpart3.txt lpt1:" from  your DOS
          prompt.  [If  you have your printer connected to a second printer
          port, substitute lpt2: for lpt1: above].

               To use "Your Financial Partner,"  you must either  be in the
          disk directory  where the program  resides, or you must  have the
          Financial Partner directory in your directory path.  Once this is
          done, you simply  type FINPART [enter] from the  command line and
          the opening credits will appear.

               If you wish to use  "Your Financial Partner" with a printer,
          the program assumes a printer  is attached to LPT1: (printer port
          #1).   If you have a printer attached  to LPT2:, you must run the
          program as follows:

                    FINPART /2 [enter].  

          This tells  the program to look  for a printer  attached to LPT2:
          rather than LPT1:.

               For  your  information,  "Your  Financial  Partner"  Version
          3.2CPP opens no files and does not write anything to  a diskette.
          If you  find a version that causes your  disk drive light to come
          on after the  program is loaded,  you have a  bogus copy and  you
          should take suitable precautions.

          General Information:
          ____________________

               "Your  Financial  Partner" performs  6  major categories  of
          financial  calculations,  plus several  useful  financial utility
          functions.   The main menu  displays the general categories.   To
          move from  choice to  choice on the  menus, use  the up  and down
          arrow  keys, the  mouse, or  the highlighted  letter on  the menu
          item.  When you are positioned at your choice press the enter key
          or click the  left mouse button.   This will transfer  control to
          the submenu  that  actually  contains  the  associated  financial
          analyses.  If at  any point in the process you wish  to return to
          the main menu, the ESC key is your path back.

               Every function  requires user input.  In writing the program
          I made every  effort to  protect you from  yourself:  you  cannot
          enter an implausible  or illegal value.  There are  two levels of
          error  trapping.  First, all user-entered  input must be numeric.
          Therefore  the moment you  enter a non-numeric  character (except
          '.' or '-') the  computer will beep and erase  your entire entry.
          Second, each  input field  is validated to  ensure that  it falls
          within the preprogrammed limits.   Thus, for example, you  cannot

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          enter  an interest  rate larger  than  99.99%, or  a loan  amount
          greater than $99999999.99.  Two factors governed these limits (a)
          limitations of  numeric representation and (b)  implausibility of
          certain combinations  (e.g. 200  year annuity  with 3000  payment
          periods per year).  The program will not  permit you to go to the
          next cell  until you provide  an acceptable entry in  the current
          cell.    (Note:   the  program  uses bank  years  [360  days] for
          calculations  involving "daily" compounding.   This was  a small,
          but  relatively insignificant,  compromise,  needed to  keep life
          simpler for me).

               Additional information appears  at the bottom of  the screen
          with  every item that  requires user  input.   This help  line is
          provided  to clarify the  entry prompt,  and, where  relevant, to
          detail the range of acceptable values.

               Several  of the  routines  require  you  to  choose  whether
          deposits, withdrawals, or payments occur at  the beginning or end
          of the period.   Most annuities and loans are paid  at the end of
          the  period; in  most  savings  plans deposits  are  made at  the
          beginning of the period.   "Your Financial Partner" allows you to
          make this determination for yourself everywhere except loans.  

               All routines follow  a common path.  When  you have finished
          entering data  and are satisfied  with your entries,  the results
          will appear  after you  press CTRL-ENTER  (the calculation  key).
          Before the computer performs the calculations,  you are given the
          option to print the results to the screen or to the printer. Once
          you  choose  your  output destination,  the  results  will appear
          nearly  instantaneously  on  the screen,  or  momentarily  at the
          printer.

               Once the output has reached its destination, you may  repeat
          the procedure  using different values,  or to return to  the main
          menu.   If you answer  the question "Another  Calculation (Y/N)?"
          with a "Y',  you will be returned  to the data entry  screen with
          all previous values retained.   To edit individual values you may
          use the  mouse to  position the cursor  at the  item you  wish to
          edit, or you may cursor to the entry.  

          Main Menu:
          __________

               Aside  from the  "Quit" function,  the main menu  displays 7
          functional choices.  These are:

                    1. Future Value of Investment
                    2. Minimum Savings For Future Value
                    3. Withdrawal From an Investment
                    4. Present Value of Future Payments
                    5. Loan Calculations

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                    6. Bond and Security Calculations
                    7. Utilities


          (1)  Future Value of Investment.

               This function  has a submenu  with 5 different  Future Value
          calculations.  These include:

                    1. Future Value Based on Periodic Deposit
                    2. Future Value Based on Lump Sum Deposit
                    3. Lump Sum Deposit Followed By Periodic Deposit
                    4. Periods For PV to Reach FV at Given Interest Rate
                    5. Interest Rate for PV to Grow to FV in N Periods

               These  functions  address  the following  questions:    If I
          invest a certain amount of money (periodically, as a lump sum, or
          both) into an account paying  a fixed interest rate compounded at
          regular intervals,  how much money  will I accumulate  after some
          interval of time.   Alternately, it answers the  questions of how
          long it will take for a sum of money to reach a new value given a
          particular interest rate, or what interest rate would be required
          to achieve  a certain  rate of  return over  a given  interval of
          time.

          (2)  Minimum Savings for Future Value.

               This function has 2 items on its submenu.  They are:

                    1. Regular Deposits Needed For Future Value
                    2. Single Deposit Needed For Future Value

               This  function  is  devoted  to   addressing  the  following
          problem.   Suppose you have  a 6 year  old child who you  want to
          send to college at age 18.  You haven't started a savings program
          yet, but you  figure that four  years of college will  cost about
          $40,000 twelve years from now.   Your question is:  How much  per
          month (or any other  period) will I have to put away on a regular
          basis (or all at  once now) to accumulate $40,000 by  the time my
          child  is ready  for college?   By the  way, at 6%  interest, you
          would  need  to  put  aside  $190.34  monthly  for  12  years  to
          accumulate $40,000 by the time your child is 18; alternatively at
          the same interest rate you  would need to deposit $19505.05 today
          to have accumulated $40,000 by the time your child turns 18.

          (3)  Withdrawal from an Investment

               There  are three  items on  the submenu  for  this function.
          These are:


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                    1. Regular Deposits-Regular Withdrawals at Future Date
                    2. Lump Sum Deposits. Regular Withdrawals N Years Later
                    3.  Regular   Deposits  Needed   For  Desired   Regular
          Withdrawal

               Consider the following problem.  Suppose you are planning to
          retire 20 years from now.  On January 1, 1993 you get a pay raise
          (or a bonus  on December 31, 1992)  that you are able  to invest.
          Your question is:  if  I invest this money on a regular  (or lump
          sum) basis from  now until I retire,  how much will I  be able to
          withdraw  on a regular  basis when I  retire before I  run out of
          money.  (If you simply want to know how much you'll have after 20
          years  you can  use the  Future Value  of An  Investment function
          1.2). 

               The first two functions require two input screens each.  The
          first  screen  is  needed  to   calculate  how  much  money  will
          accumulate before you  can start to withdraw  it.  The second  is
          needed  to determine both the period  over which withdrawals will
          take place, and the frequency of withdrawals.

               The  third function  approaches the  problem  in a  slightly
          different way.  Here our interest  is in determining the best way
          to obtain a specific amount to withdraw over some period of time.
          This is  not useful for  perpetuities (i.e. Social Security  or a
          typical  pension  plan  where  withdrawals  take  place  over  an
          indefinite period of time). 

               If you  are interested  in determining how  many periods  it
          takes to exhaust a particular amount given withdrawals of a fixed
          amount at  a fixed  interest rate, use  the loan  calculator (see
          function 5.1  below).  A loan is a  negative annuity in which the
          bank loans  you money  at a  specific interest  rate for a  fixed
          period  of time,  to be  paid back  (amortized) by  fixed amounts
          periodically.    Withdrawing money  as  an  annuity is  the  same
          problem as a loan, but in reverse.   In this case you are loaning
          the bank money (your nest egg),  which they will pay back to  you
          at a specific interest rate for a fixed period of time. 

          (4)  Present Value of Future Payments

               There are two functions in this submenu.  They are:

                    1. Lump Sum Future Payment, Present Value
                    2. Fixed Series Future Payments, Present Value

               Suppose you win the Oregon Lottery.  You might be  given the
          choice  of receiving $200,000 per  year for 20  years, or a check
          now for $2,000,000.  Which is the  better deal?  Most of us won't
          ever  face  this  choice;  however we  might  face  the following

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          choice:   When you  retire, your  pension plan  may give  you the
          option  of taking your  retirement income  as a  lump sum,  as an
          annuity for a  fixed length of  time, or as  a perpetuity.   This
          pair of functions  enables you to determine the  best strategy to
          the  pension  problem.   It  computes  the  Present Value  of  an
          Investment that pays a specified  amount in the future, either as
          a lump sum  or as an annuity.  More specifically, it provides the
          present value of a lump sum to  be paid at a definite time in the
          future, or  the present value  of a series of  payments beginning
          now and continuing  to a definite time  in the future.   (It does
          not deal with perpetuities).  
           
               By the way, at today's paltry interest rates (say 2.75%) the
          present value  of $200,000 per year for 20  years is more than $3
          million.  In  other words, the  lottery would have  to pay you  a
          lump  sum in excess of $3 million before  the lump sum would be a
          good  deal.  If you  thought you could  get at least  10% on your
          investment, the $2 million lump  sum settlement would be a better
          deal since  the present value  of the  $200,000 per  year for  20
          years at 10% is only $1.7 million.

          (5)  Loan Calculations

               There are  7 items on  the Loan Calculation submenu.   These
          are:

                    1. Loan Calculator
                    2. Payments for Different Interest Rates - Comparison
                    3. Loan Amount for Given Periodic Payment
                    4. Amortization Schedule
                    5. Current Loan Balance
                    6. Accelerated Amortization - Payoff Loan Early
                    7. Refinance a Loan


               This section  is, by far,  the most extensive part  of "Your
          Financial  Partner."  Most people  at some time  in life secure a
          loan of  one type or another.  These  7 loan functions enable the
          user to address almost any loan question imaginable.  

               Six pieces of information are needed to render a loan fully.
          These  are:   (a) Loan  Amount;  (b) Nominal  Interest Rate;  (c)
          Payment Frequency; (d) Duration  of Loan; (e) Payment Amount  (f)
          Interest Compounding  Frequency.    Of these  6, items  (a), (b),
          (d), and (e) are  free to vary somewhat, while items  (c) and (f)
          are important but typically constrained by external factors.  The
          Loan  Calculator (Function  5.1) enables  the  user to  enter any
          three of the  four freely  varying items  (a, b, d,  e), and  the
          program  will automatically  calculate  the  fourth  item.    The
          Payment Frequency (item c) cannot be omitted,  while the interest

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          compounding frequency (item f) is, for simplicity, assumed  to be
          the same as the payment frequency.  Thus, you can enter  the Loan
          Amount,  the Nominal Interest  Rate, and desired  Payment Amount,
          and  "Your  Financial  Partner"  will  calculate  the  number  of
          payments required to fully amortize the loan.  Similarly, you can
          enter the Loan Amount, the Loan Duration, and the desired Payment
          Amount and "Your  Financial Partner" will calculate  the interest
          rate needed  to fully amortize  the loan under  those conditions.
          The Loan Calculator will compute the missing value in each of the
          four instances where one of  the four key variables is  left out.
          If no information  is left out, or  if more than one  variable is
          left out, you will encounter an error message.

               As noted  above, the Loan  Calculator is not limited  to use
          with loans.   If you  understand the relationship between  a loan
          and an  ordinary annuity  (a loan is  simply a  negative ordinary
          annuity),  the loan  calculator can  also be  used as  an annuity
          calculator.  Consider, for example,  that you have $130,000 in an
          IRA when  you  retire.   The IRA  is paying  a  nominal 6%  annum
          interest.  You  have retired and want to  begin withdrawing $1000
          per  month.   How long will the  money last at this rate?  To use
          the Loan Calculator for this  question make the $130,000 the Loan
          Amount, $1000 per  month the payment amount, and  6% the interest
          rate.  The  missing quantity (Loan Duration) is  the value you're
          looking  for.    This  will  be calculated  when  you  press  the
          calculate key.  By the way, the money would last for 17.541 years
          (210 full months at $1000 per month, and a final payout of $459).
           

               The Loan Calculator  also can be used to  determine the true
          APR on a loan  in which "points"  (prepaid interest) are paid  to
          secure the  loan.   Typically mortgages are  the only  loans with
          points.  To use the loan calculator in this way, you will need to
          run it twice.   An example illustrates this.  Suppose you want to
          borrow  $100,000 for 30  years at 8.0%.   The bank  will loan the
          money to you, but  you must pay a combined loan  fee and discount
          of  2 "points" to secure the loan.  Since each "point" represents
          1%  of the loan,  a 2 "point"  fee and discount  amounts to $2000
          paid at closing.   While the mortgage is secured at  a nominal 8%
          per annum,  what is  the true "Annual  Percentage Rate"  when the
          points are figured?   Run the loan calculator  first to determine
          what the monthly payment will be on  a $100,000 loan for 30 years
          at 8.0%.  The computed amount is $733.76 per month.  Run the loan
          calculator a second  time, letting $98,000 ($100,000  - $2,000 in
          points)  represent  the loan  amount.   Leave  the  interest rate
          blank, but instead fill in  the monthly payment amount as $733.76
          (you will still be paying  back $100,000 in principal even though
          you have effectively  only borrowed $98,000 from the  bank).  The
          calculated interest  rate is 8.214%.   This is the  "true" Annual
          Percentage rate of your 8% loan.  [Under Federal Truth-in-Lending

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          Law,  banks are required to tell you what the true APR is.  Often
          other amounts  figure into  the APR.   For example,  I am  in the
          process  of refinancing  my house  right now.   My  bank includes
          points, tax service  fee, interim interest charges,  and mortgage
          insurance  as part  of the  "prepaid"  charges that  are used  in
          calculating the APR.   My refinanced loan, which is  locked in at
          an annual rate of  7.75%, actually has an 8.207% APR  after these
          prepaid items are added.

               Often  you  are  concerned with  determining  the  effect of
          interest  rate fluctuations  on payment  amounts.   Function  5.2
          provides  you with  a comparison  of  payments for  a given  loan
          amount over a range of +-1% (in 0.25% intervals).  

               How many  times have you  wondered how much house  you could
          afford if you  could only manage a 30-year mortgage with $750 per
          month in  principal and interest  payments?  What happens  to the
          affordability of a  home if interest rates change?   Function 5.3
          provides   you  with  a comparison  of Loan  Amounts for  a fixed
          periodic payment at interest rates over a range of +-1% (in 0.25%
          intervals).

               Function  5.4, the  Amortization  Schedule, provides  a full
          payment  schedule for any  loan.  It reports  the amount of every
          payment  apportioning the  proper amounts to  principal reduction
          and to interest,  and provides a running loan  balance after each
          payment  is  made.    [You  should beware  that  the  outstanding
          balances  calculated after any  specific payment may  differ from
          the  actual outstanding  balance reported  by  your bank.   "Your
          Financial Partner" assumes that you make your payments at exactly
          equal intervals.   Your bank computes interest  charges daily and
          calculates your  balance based on  the exact number of  days that
          elapse between each periodic payment.]

               The  Loan Amortization schedule  allows you use  9 different
          payment intervals.  The program  calculates the  dates associated
          with each payments based upon the loan starting date you provide.
          In  most instances  the program  will  honor your  starting date.
          There are two  circumstances where the program will override your
          choice.  The   first  involves  Semi-Monthly   payment  schedules
          (exactly 2 payments per month, 24 payments per year).  Regardless
          of the  date you  select,  the program  only allows  Semi-Monthly
          payments  to take  place on the  1st and  the 15th of  the month.
          Thus, if  you select a starting date between  the 2nd and 15th of
          the month, the  first payment will be  forced to the 15th  of the
          month.  If  you select a starting  date between the 16th  and the
          end of the month, the starting date will be moved to the first of
          the  following month.  The second instance involves Semi-Monthly,
          Monthly, Bi-Monthly,  Quarterly, Semi-Annual, and  Annual payment
          schedules. If you try to schedule your first payment on the 29th,

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          30th or 31st  of the month, the program will force the payment to
          the 1st  of the  following month, and  payment intervals  will be
          calculated from that point.
            
               Function  5.5 calculates the  outstanding balance on  a loan
          after any given periodic payment has been made.  There is nothing
          in Function 5.5 that can't be obtained from the full amortization
          schedule (Function  5.4); however users  may simply wish  a quick
          loan  balance  without  going  through  the  trouble  of  a  full
          amortization schedule.    

               Suppose you  have a home loan  at 8.5% interest that  has 20
          years before it  is fully amortized (paid  off).  You are  due to
          retire in  12 years and you would like to pay the loan off by the
          time you  retire.  What  is the  best way to  do this?   How much
          money will  you save over the long  run by doing so?   Aside from
          writing a check today for the  balance due, there are really only
          three regular ways  to accelerate the  payoff of  the loan.   The
          first is to  increase your monthly payments by  some fixed amount
          and apply  the extra amount  to principal reduction.   The second
          way is to take a single lump sum of cash  and directly reduce the
          principal.  The  third is  to make an  extra payment every  year.
          There are  also combinations  of these, as  well the  strategy of
          submitting variable amounts  as extra payments.   "Your Financial
          Partner" handles only the regular ways of doing this.  [I am also
          aware  of the  strategy of  dividing a  monthly payment  into two
          equal fractions and  sending that fraction to the  bank every two
          weeks.   This results  in 26  biweekly payments.   I  surveyed 18
          banks and  mortgage companies in  the Portland area.   None would
          permit a mortgagor to submit fractional payments as this strategy
          requires.   Therefore,  I did  not include  this option  in "Your
          Financial  Partner".   However, you  should  understand that  the
          biweekly option is  basically the same  as submitting 13  monthly
          payments  annually,  with  the entire  extra  payment  applied to
          principal  reduction.   This  latter strategy  is  offered as  an
                                                         __
          option in "Your Financial Partner."  All of the banks I contacted
          were more than willing to  accept an extra payment submitted this
          way.]  

               Function  5.6  is  offered  for the  user  to  consider  the
          different approaches to  accelerating the payoff of a  loan.  The
          procedure used  in "Your Financial Partner" for  dealing with the
          first two acceleration techniques is straightforward and requires
          no explanation.  I had to impose some constraints to simplify the
          calculations  for the  third option.    "Your Financial  Partner"
          assumes  that   you  want   the  first   extra  payment   applied
          immediately,  and then subsequent extra payments would be applied
          after a full year  has elapsed between each extra  payment.  Thus
          on a loan  with monthly payments the first  extra monthly payment
          would be applied with the  next payment due, and subsequent extra

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          payments would  be added  every 12th payment  thereafter.   For a
          weekly loan the interval would be 52 weeks, etc.

               This function  reports the  total amount  paid under  normal
          amortization  and  under  accelerated  amortization, as  well  as
          providing both  the dollar  savings  and reduction  in loan  term
          resulting from acceleration.  

               Loan function 5.7 enables you to explore the nether world of
          loan  refinancing.     With  today's  volatile   interest  rates,
          virtually all of  us have considered refinancing  loans initially
          obtained  at  rates  significantly  higher than  those  presently
          available.   The  goal in  refinancing  usually is  to lower  the
          monthly payment, to lower the  total amount of interest paid over
          the life a  loan, or both.   There are times when  refinancing is
          not economically  prudent (this  is particularly  true when  loan
          fees  and  points  are  high and  the  differential  between  the
          refinancing  interest  rate  and the  original  interest  rate is
          relatively small,  or when you  don't plan to  stay in  your home
          long  enough to recapture  the refinancing costs).   Function 5.7
          takes all of  the relevant variables into consideration:  current
          interest  rate,  current  loan term,  existing  balance,  current
          monthly  payment, proposed interest rate, proposed loan term, new
          monthly payment, and  new loan fees and points.   These variables
          are combined  to produce  a comparison of  what the  net periodic
          savings  will be under the new loan terms, what the gross savings
          will be over the life of  the loan taking into consideration  the
          effect  of new  loan  fees  and points  if  applicable, and  will
          calculate the length of time needed to pay back the loan fees and
          points given the reduced monthly  payments.  Typically it is this
          combination  of  information  that  allows you  to  make  a  more
          informed  decision about refinancing.   You should  remember that
          "Your Financial Partner" does not  take into account the fees and
          points you  might have paid to  secure the original loan.   These
          fees  should be subtracted  from the GROSS  savings to  get a NET
          savings under refinancing.    

          (6)  Bond and Security Calculations:

               Relatively  few  of  us  will  ever  purchase  corporate  or
          municipal  bonds.    Mutual  funds  have  become a  very  popular
          investment  for  the  average  investor,  particularly given  the
          anemic  returns  on  the safer,  and  risk-free  investments like
          savings accounts, CD's,  and Money Market funds.   A large number
          of  low-  to  medium-risk  mutual  funds  invest  part  of  their
          resources  in  municipal  and/or  corporate  bonds.    Therefore,
          understanding the  way in which  bond prices and bond  values are
          affected  by market  factors may  provide some  insight  into the
          price ebb and  flow of mutual funds  that invest in them.   These
          are the intents of Functions 6.1 - 6.3.

                                          11














          

            
               Similarly,  the poor returns  on the safer  investments have
          driven  many  average investors  into  the stock  market  or into
          mutual  funds  in an  effort  to  capture  larger returns.    The
          fundamental problem that  these investment tools present  for the
          average  investor is  how to  compare the  yields on  these risky
          securities  with returns offered on risk-free investments such as
          savings accounts,  CD's and Money  Market Funds.  To  compare the
          yields, we first have to be able to compute the annualized return
          (or  yield) on  these  securities.   This is  complicated because
          stocks, bonds,  and mutual  funds change value  on a  daily basis
          either  by  capital  appreciation, by  payment  of  dividends and
          capital  gains, or  by some  combination of  all these  factors. 
          Function 6.4 addresses this matter. 
            
               The functions  grouped under Bond  and Security Calculations
          include:

                         1.   Bond Valuation
                         2.   Bond Yield to Call
                         3.   Bond Yield to Maturity
                         4.   Annualized Yield on Security

               Bonds are issued at a face value (called the par value) with
          a coupon  interest rate (the annual rate  of interest paid on the
          bond),  and a term  of issue (the  length of time  until the bond
          matures and is redeemed by the  issuer).  Bonds can be  purchased
          when they are issued, but also at any time after issue and before
          maturity.  The value of the bond changes over time in response to
          two  factors:   market interest  rates and  time  remaining until
          maturity.  If you buy  a bond at issue, you  will buy it for  its
          face  value.   Each  year  you  will  receive an  interest  check
          computed as the bond's face value times the coupon interest rate.
          Thus a $1000 bond, issued for  30 years, paying a coupon interest
          rate of 10% annually will  yield $100 per year for 30 years.   At
          the end of 30 years (the bond maturity date) the bond issuer will
          redeem the  bond for  $1000.   If  market interest  rates do  not
          fluctuate during the 30 years, the  bond will have yielded a  10%
          return.  If market interest  rates do fluctuate, the bond's value
                                             __
          will change over  time.  If  market interest  rates go down,  the
          bond's value will increase and it is sold as a premium bond.  The
                                                         ____________
          reason is simple.   New bonds  issued at that  time will carry  a
          lower coupon interest rate  which yields a lower annual  interest
          payment  and  a  lower  overall yield  at  maturity.    Naturally
          investors would be willing  to pay more for a bond  if they could
          get a higher interest rate  and a higher annual interest payment;
          thus, your  bond's value  is set to  be that  where its  yield at
          maturity  equals that of the currently available (lower yielding)
          bond.   This means that  the bond will  have to be  purchased for
          more than its face value.  On the other hand, if  market interest

                                          12














          

          rates are higher than the bond rates, people will try to sell off
          the bonds and move money  into higher yielding investments.  This
          will, in turn, cause the bond to be sold at a  discount, with the
                                                         ________
          price being set to  that where its yield at  maturity also equals
          that of the currently available (higher yielding) bonds.

               Function 6.1  computes the  current value of  a bond  at any
          time between issue date and maturity.  It does so by  taking into
          account  the  difference  in coupon  interest  rates  and current
          interest rates.  If you experiment with function 6.1 you will see
          that  there  really  is an  inverse  relationship  between market
          interest rates, coupon interest rates, and bond value.

               If, after  a  bond is  issued,  market interest  rates  drop
          substantially, the bond issuer may  want to redeem the bond early
          and  reissue new  bonds to  take  advantage of  the lower  market
          interest rates.    They can  do  so only  if  the bond  has  call
                                                                       ____
          provisions.   A call  provision is a  condition specified  in the
          __________      _______________
          bond that  allows its issuer  to redeem  the bond  early for  any
          reason  provided certain temporal conditions hold (e.g. more than
          5 years  has elapsed since the bond was issued).  Typically bonds
          are   called  only   if  market   interest   rates  have   fallen
          significantly.   Bonds that  are called  generally yield  a lower
          overall  return  on  investment  than  bonds  held  to  maturity.
          Issuers usually establish  a formula to determine how  to set the
          price of  a bond  at call.   For  example, some  bonds have  call
          provisions  that set the call price as:  bond par value x (100% +
          current market  interest rate)N  where N is  the number  of years
                                        N
          that have elapsed  since the bond was  issued.  In any  case, the
          call  price is  uniquely determined  for  every bond  and can  be
          easily calculated.  Function 6.2 will enable you to determine the
          yield of a bond that has been called after N years, given current
          market interest rates and a known call price.

               If you  buy a bond at its original issue (at its par or face
          value) and hold it to maturity, the yield on the bond is the same
          as  its coupon interest rate.  On the other hand, bonds purchased
          after their initial  issuance are rarely purchased at  par value.
          Thus, if these bonds are held to maturity they will yield more or
          less than  the coupon  interest rate.   Bonds purchased  for less
          than par value  (discount bonds) and held to  maturity yield more
          than the coupon interest rate.  This makes sense because the bond
          will return  not only the  fixed interest payment every  year but
          will  also  pay the  bond's par  value  at maturity.    Thus, the
          addition of  a capital gain  (the profit from redeeming  the bond
          for more than  its purchase price) to the  annual coupon interest
          produces a yield  to maturity higher  than the coupon  rate.   By
          contrast, the opposite condition obtains when bonds are purchased
          for more  than par  value (premium bonds)  and held  to maturity.
          Here  there is  a  capital  loss at  maturity  when  the bond  is

                                          13














          

          redeemed for a lower price than  that for which it was purchased.
          This loss reduces the yield to maturity below the coupon interest
          rate.    Function  6.3  calculates  bond  yield  to  maturity  by
          factoring  in purchase  price  versus the  bond's  par value  and
          length of time to maturity.

               Finally,  Function 6.4 addresses  the problem raised  in the
          introduction.   Suppose you   invest $1000  in a  mutual fund  on
          January 15, 1993.  The mutual fund  shares are priced at $10 each
          so on January 15,  1993 you own 100 shares.  On  the 15th of each
          subsequent  month you invest  an additional $25  to purchase more
          shares (at their  then-current value).  On December  31, 1993 the
          mutual fund declares a $0.60  per share dividend and a $0.30  per
          share capital gains payment.  As of December 15, 1993 you own (as
          a  result of  the initial  investment and  the 11  subsequent $25
          investments) 124.664  shares so  that the  dividend plus  capital
          gains payout on December 31, 1993 is worth $112.20, which is then
          reinvested in additional shares each costing $10.95.  This leaves
          you  with a  portfolio  consisting of  134.911  shares now  worth
          $10.95 each.   As of January 1, 1994,  the portfolio is valued at
          $1477.27.  What is your annual rate of return on this investment?

               For  the  average  investor, this  is  a  difficult question
          complicated by the fluctuating price  of the fund, the payment of
          dividends  and capital  gains and their  subsequent reinvestment,
          and  the varying  holding  periods of  individual  shares in  the
          mutual  fund.  Fortunately,  "Your Financial Partner"  makes this
          calculation relatively straightforward.  

               To understand how  this works, it is necessary to understand
          that  money you  pay out to  purchase shares  of a security  is a
          negative cash flow  to you; money you receive  from dividends and
          capital  gains  are  positive  cash  flows  to  you.     However,
          reinvested dividends and  capital gains are neither  positive nor
          reinvested
          __________
          negative  cash  flows  for figuring  yields  (they  are, however,
          exceedingly  important in  determining your  cash  basis for  tax
                                                             _____
          purposes); the reinvestments  are figured in the  final valuation
          of  the  fund [in  other  words,  at  the  end of  the  year  the
          reinvested  dividends  and  capital gains  are  reflected  in the
          portfolio valuation of $1477.27 and do not, therefore, have to be
          considered as  individual cash  flows.  They  can, of  course, be
          treated as individual cash flows;  however, they would need to be
          entered twice:  first as a positive cash flow to you, and then as
          a negative cash  flow (you used the money  to purchase additional
          shares).  But since both  of these events occur simultaneously in
          an automatic  reinvestment program, the  net effect is  simply to
          increase  the  value  of  the  portfolio  by  the  dollar  amount
          reinvested and nothing  is gained by figuring the individual cash
          flows.   If  this is unclear  to you,  the same logic  applies to
          savings account.   You can figure out your annual  rate of return

                                          14














          

          on  a  savings  account  without  having  to  enter the  interest
          payments received as a positive  cash flow to you, followed by  a
          negative cash flow  reflecting its "reinvestment" in  the savings
          account.   All of the  interest reinvestment is reflected  in the
          value of the savings account at any moment in time.]

               Let's now consider this example.   Function 6.4 asks for the
          following   information  in   the  following   order  (underlined
          information represents information you type in):

          Initial Value:   $1000   (  This was  our initial investment.  It
          Initial Value    _____
          could also be the value on January 1, 199x)

          Date:     01/15/93 (This was the date of our initial investment)
          Date      ________

          Final Value:   $1477.27  (The value of the portfolio at the close
          Final Value    ________
          of  business  on December  31,  1993.    Note  that there  is  no
          provision   in  "Your  Financial  Partner"  for  calculating  the
          valuation of a portfolio.   This information still must come from
          an  external source,  most typically  a  statement from  the firm
          holding or issuing the security.) 

          Date:   01/01/94  (This date  corresponds with  the value  at the
          Date    ________
          close of business on 12/31/93).

          Guess at a rate of return:  10%   (Just pick any number.  This is
          Guess at a rate of return   ___
          needed to get  the calculations started since I  use an iterative
          routine to solve for the annualized yield.).

          The above 5 entries  are required.  The next 24  pairs of entries
          are   optional;  however  every   non-zero  cash  flow   must  be
          accompanied by  a date that  falls between the initial  and final
          dates given  above.  The cash flows do  not have to be entered in
          chronological order.

          CF#1:  -25.00  (Cash Flow #1.   Negative because it represents an
          CF#1    _____
          additional investment)

          Date:   02/15/93  (Date of $25 investment.   The number of shares
          Date:   ________
          purchased is irrelevant here)

          CF#2:  -25.00 (Cash Flow #2)
          CF#2:  ______

          Date:    03/15/93 (Date of next $25 investment)
          Date:   _________
          .
          .    (Cash Flows 3-10 filled in here)
          .
          CF#11: -25.00 (Cash Flow #11)
          CF#11: ______

          Date:       12/15/93 (Date of last $25 investment)
          Date:       ________

                                          15














          

          Once this  information is  entered and checked,  we are  ready to
          calculate  the annualized  yield on  our  mutual fund.   Pressing
          CTRL-ENTER performs  the calculation.   The  resulting annualized
          yield, as  you can  see if  you do  this example,  is 18.710%,  a
          significant yield by any criterion.  

               Function 6.4 also can  be used to calculate the yield  on an
          entire portfolio, provided that the total number of cash flows in
          the portfolio do not exceed  24.  Another example will illustrate
          this.

               Suppose that you invest $1000 in fund #1 on August 13, 1992.
          You follow this with an investment  of $1000 in a second fund  on
          August  17, 1992,  $1000 in a  third fund  on November  11, 1992,
          $1000 in a fourth fund on December 10, 1992, and $3000 in a fifth
          fund on December 11, 1992.  Suppose in addition that Fund #1 pays
          $66.02 in capital gains on December 31, 1992, Fund #2 distributes
          $26.11 in dividends on December 31, 1992, and Fund #5 distributes
          $23.10 in dividends and capital gains on December 31,  1992.  The
          other  funds distribute no  earnings.  All  dividends and capital
          gains are reinvested  in shares in their respective mutual funds.
          On  January 1,  1993, after  all reinvestments  are figured,  the
          portfolio is valued at $7335.10.  What is the annualized yield on
          this portfolio?  (Note that although you can calculate the yields
          on  all  of  the  individual  securities  or  mutual  funds,  the
          portfolio  yield is not the  simple average of  the yields of the
          individual  elements  making up  the portfolio.   Since  there is
          different holding period for each security, and each security may
          represent  a  different  fraction  of  the  total  value  of  the
          portfolio, the  proper  way  to compute  portfolio  yield  is  to
          account for all of the cash  flows into and out of the  portfolio
          in the same way you would for its individual elements).

               There are  two ways  to approach this  question.   Both will
          yield the  same  answer.   The  best  approach is  to  treat  the
          portfolio as having  a $0.00 value  on January 1, 1992  (which it
          did).   Then on  January 1,  1993 the  portfolio has  a value  of
          $7335.10.  During  the year the portfolio had  five negative cash
          flows (investments)  over five different  dates.  These were:   -
          1000,   08/13/92;    -1000,  08/17/92;  -1000,  11/10/92;  -1000,
          12/10/92; -3000, 12/11/92.

               Entering  these values produces a portfolio yield of 32.702%


               The  alternative is  to  treat the  portfolio  as having  an
          initial $1000 value  as of 08/13/92  (which it did)  and a  final
          value of $7335.10 on  01/01/93.  Then we factor  in four negative
          cash  flows over  four  different  dates.   These  were:   -1000,
          08/17/92; -1000, 11/10/92; -1000,  12/10/92; and -3000, 12/11/92.

                                          16














          

               Entering these  values also  produces a  portfolio yield  of
          32.702%

               The  former  approach  is best  in  circumstances  where the
          portfolio has a  $0.00 initial value at  some point in  the year;
          the latter approach  is best in cases of  a continuing portfolio.
          We could, for  example, use the second approach  to determine the
          yield  of the portfolio in the  second year.  To  do so, we would
          consider  the value  of $7335.10  as the  portfolio value  at the
          beginning  of the  period, and  then assess  the yield  from that
          _________
          point considering all of the relevant cash flows.

               Function 6.4 can  handle both positive and  negative yields.
          Remember  that while positive  returns can, in  principle, assume
          any positive value,  negative yields can never be  less than 100%
          since  you can  never lose  more than  the total amount  you have
          invested at any given point in time.  

               Note also  that there are  some combinations  of cash  flows
          that do  not  provide a  single  solution for  the  yield.   This
          typically  occurs when there are  many positive and negative cash
          flows for a security or portfolio.   If you get an error  message
          telling you that you have  an indeterminate solution, or that the
          solution did not converge in 50 iterations, try reorganizing  the
          way you enter the data.   Sometimes it helps to simply enter  all
          the positive cash flows first,  followed by all the negative cash
          flows (or the reverse).   The problem typically arises when there
          are many sign changes over the range of cash flows.

          (7)  Utilities

               Three different  financial utilities  are  offered in  "Your
          Financial Partner."  They are:

                         1.   Effective Interest Rate
                         2.   Taxable Interest Rate
                         3.   Days Between Dates

               Suppose you  want to put money  into a savings account  at a
          local bank.  There are three banks nearby that each pay 5% annual
          interest.    Bank  1  compounds the  interest  quarterly,  Bank 2
          compounds  monthly, and  Bank 3  compounds daily.   If  all other
          services offered are  equal, into which bank should  you put your
          money to maximize your yield?

               Function  7.1  calculates the  effective  interest rate  and
          provides you with the answer.  Bank 1, paying a  nominal interest
          rate of 5% per annum  compounded quarterly, is actually paying an
          effective  interest  rate  of  5.09%;   Bank  2,  which  pays  5%
          compounded  monthly,  is  actually paying  an  effective  rate of

                                          17














          

          5.12%;  and Bank 3, which compounds  daily, provides an effective
          yield of 5.13%.  Thus, Bank 3 should get your money.  In general,
          the more often  interest is compounded  the higher the  effective
          interest rate.

               The  financial section of today's newspaper is littered with
          advertisements  offering a variety  of investments.   Suppose you
          have $1000  to invest.   You want something relatively  safe, yet
          something that provides a higher return than an ordinary passbook
          savings account.   You are  given two  possible investments  that
          meet your  objectives to provide  a safe, modest rate  of return.
          The first of these invests  in short-term corporate bonds and has
          consistently returned about 7.5%.  The second of these invests in
          a  variety of  tax-free  municipal  bonds  and  has  consistently
          returned  about 6%.  Other  things being equal,  which of the two
          investments should you choose?  

               The  key element  in  investing  is  recognizing  that  some
          investments generate  gains that  are completely  free of  taxes,
          while  others yield profits  that are subject  to ordinary income
          tax.  To compare any two investments fairly, we need to level the
          playing field.  Function 7.2 provides the necessary levelling.  

               Whenever  we make money  from our investments,  our earnings
          are subject to income tax unless the earnings are tax-free.  Most
          investors will find  themselves in either the 28%  or 31% federal
          marginal tax bracket.  In  addition, many states also tax profits
          from  investments.  Suppose  our hypothetical investor  above was
          paying federal  tax at the 31% marginal rate,  and state tax at a
          9% marginal  rate.  This  means that the earnings  are reduced by
          31% because of federal tax, and  9% because of state tax.   Thus,
          our taxable yield of 7.5% is reduced to 5.175% because of federal
          tax and to 4.5%  when we add in  state tax.  This means  that the
          two investments are hardly  equivalent.  Once taxes are  factored
          in,  the tax-free  investment  pays 1.5%  more  than the  taxable
          investment.

               Function  7.2 turns  this problem  around  by levelling  the
          playing  field  in the  opposite  direction.   It  approaches the
          problem by asking what the taxable equivalent of a tax-free yield
          is.  In the problem described above, the value of our 6% tax-free
          yield  is  increased  by  the  combined  federal  and  state  tax
          obligation.  We would have  to have a taxable yield  greater than
          8.695% to  offset the  effects of federal  tax; the  return would
          have to equal or  exceed 10% to offset the combined  effects of a
          31% federal tax and 9% state tax.

               Function 7.3 simply  answers the question  of how many  days
          have  elapsed  between  two  dates.    This  routine  takes  into
          consideration leap years.

                                          18














          

              
          Programming Considerations:
          ___________________________

               "Your Financial  Partner" was  written in  Borland C++  3.1.
          The menus  and data  entry screens were  adapted from  the Object
          Professional C++ Library  from Turbo Power  Software.  To  ensure
          accuracy,  all  financial  calculations  were  performed  in  BCD
          (financial)  arithmetic and  follow banker's  rules of  rounding.
          Even so, there will be differences between results obtained using
          Financial  Partner, spreadsheets,  and  other financial  analysis
          programs.   Where  comparable  routines  exist,  "Your  Financial
          Partner"  has been  thoroughly tested  with  examples from  major
          financial  analysis textbooks and its results accurate, to within
          limits  of roundoff error,  with those obtained  with Quattro Pro
          4.0,  Excel 3.0,  HP 10B  and 12  calculators, and  the published
          textbook answers.      

               I sincerely hope that "Your Financial  Partner" is useful to
          you.  I spent a great deal of time trying to write a program that
          I could use.  While  I've tested all of the functions with a wide
          variety of  data from  financial analysis  text and am  convinced
          that  all  egregious  bugs  have  been  exterminated,  I've  been
          programming  for long  enough to  know that  bugs cannot  ever be
          completely eradicated.   If you run  into any problem,  encounter
          any  results  that  do  not  look  right  or  that  you know  are
          incorrect, please drop  me a note and  explain the circumstances.
          I do not want a "buggy" program circulating.


          Legal Matters:
          ______________

               My  legal  advisors  tell  me  that  I cannot  warrant  this
          program, expressly  or by implication.   So there is  no warranty
          attached to "Your  Financial Partner."  You'll just  have to take
          my word  that it does do financial calculations,  and as far as I
          can figure it mostly gives correct answers.  This generally means
          that I am  not responsible if this  program ruins your life.   On
          the other  hand, if it makes you a  millionaire, I'd like to know
          about it.

          Money and Other Matters:
          ________________________

               As   indicated  at  the  beginning  of  this  manual,  "Your
          Financial  Partner" is  distributed as  "Shareware."   If,  after
          using it for  30 days, you find it valuable,  please register the
          program by  filling out the  form below and  send it to  me along
          with a  check for  $29.95 to complete  the registration  process.
          Registered  users  will  receive  the  latest  version  of  "Your
          Financial  Partner,"    free  upgrades  for  6  months  following
          registration,  will be able  to receive upgrades  thereafter at a

                                          19














          

          nominal fee, and are eligible for telephone support.

          Customer Service:
          _________________

               Users  needing  help with  "Your  Financial  Partner", users
          wishing to report a bug, users  wishing to lavish me with praise,
          or users wanting to carp may contact me in writing at the address
          below (see  Registration Form), or electronically  via CompuServe
          (71212,2327),   Internet   (h1mf@odin.cc.pdx.edu),    or   BITNET
          (H1MF@PSUORVM.BITNET).   If you have  an urgent problem,  you may
          phone  me at  503-725-3910 (this  is in  the Pacific  Time Zone);
          however,  this is my office phone number  and I may or may not be
          able to talk  with you when you call.   If you get  my voice mail
          instead of  me,  please leave  me a  detailed message  indicating
                                               ________
          precisely  what  you need.    Also  indicate  whether you  are  a
          registered user.  I cannot afford to provide telephone support to
          unregistered users (I will respond to any and all electronic mail
          or US Mail messages whether you are  registered or not).  Include
          in your phone message a time of day where I will be able to get a
          hold of you by phone.  I will try to respond as soon as possible.



          Acknowledgements:
          _________________

               Thanks are  due to  my wife, Susan  Wolf, and  our children,
          Sarah and Elisabeth, for their  support and for enduring the many
          months that writing this program consumed.   Thanks also  to Tech
          Mate  for  their helpful  advice  on using  Object Pro  C++.   My
          gratitude  goes out  to all  the beta  testers -  especially Bill
          Paudler, Don Flinn, and Geoff Kleckner - and to users of previous
          versions  of  "Your   Financial  Partner"  for   suggestions  and
          encouragement, not  to mention  for  drawing noxious  bugs to  my
          attention.  


          Things In The Planning Stages:
          ______________________________

               Future versions of  "Your Financial Partner" are  already in
          the planning  stages.  Proposed  additions include (1)  a simple,
          pop-up  four-function calculator that  will allow users  to paste
          results  into data fields;  (2) loan qualification  function; and
          (3) inflation-adjustment  option in  various routines.  I welcome
          user suggestions.  


          Useful Financial References:
          ____________________________

          The  following  proved  invaluable  to  me  in  developing  "Your
          Financial Partner."   I  recommend them to  anyone wishing  to do

                                          20














          

          further research.

          Gordon  Alexander  and  William Sharpe,  1990,  Investments,  4th
          Edition.  Englewood Cliffs:  Prentice-Hall.

          Eugene F.  Brigham, 1992,  Fundamentals of Financial  Management,
          6th  Edition.    San  Diego:    Dryden  Press  (Harcourt,  Brace,
          Jovanovich).

          Petr Zima and Robert L. Brown, 1984, Contemporary  Mathematics of
          Finance (Schaum's Outline Series).  New York:  McGraw Hill.








































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          Registration Form:
          __________________

                                Your Financial Partner
                                   Version 3.2 CPP


          Date_____________

          Name__________________________________________________________

          Address_______________________________________________________

          City________________________________ State_________Zip________

          Phone______________________

          Where/how obtained_____________________________________________


          Please return this form with a check for $29.95 to:

                                Dr. Marc R. Feldesman
                                 Flying Pig Software
                                   4210 SW Comus St
                             Portland, Oregon 97219-9504


























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