1 - DayCount Conventions

Question 1

Explain ACT/360

Answer 1

The Actual number of days in the calculation period in which interest is being paid by dividend by a 360-day year

Question 2

Explain ACT/ACT

Answer 2

The Actual number of days in the calculation period in which interest is being paid by dividend by a 365-day year. If, however, any part of the calculation period falls in a leap year then the sum of those days that fall within the leap year are divided by 366 and the sum of the remaining days that fall in the non-leap year are divided by 365 days.

Question 3

Explain ACT/365

Answer 3

The Actual number of days in the calculation period in is divided by 365.

Question 4

Explain 30/360

Answer 4

The Actual number of days in the calculation period in is divided by 360 days. Unless, firstly, the last day is a day other than the 30th or 31st day of a month in which case, the month that includes that last day is not considered to be shortened to a 30 day month. Or, secondly the last day of the calculation period is the last day in February, in which case you will assume that February is not lengthened to be a 30 day month.

Question 5

Explain 30E/360

Answer 5

The Number of days in the calculation period in which interest is being paid divided by 360 days (a 360 day year is assumed with 12 months of 30-days) unless in the case of the last day in February, in which case you will assume that February is not lengthen to a 30 day month.

Question 6

Explain 30E+/360

Answer 6

Same as the above unless the first date falls on the 31st and it is changed to the 30th, or if the second date falls on the 31st it is changed to the first of the next month

Question 7

Consider the Following Loan:
StartDate:             13th January 1997
EndDate:              13th July 1997
Principal:              $100
Rate of Interest:   8%

Calculate the Interest Payment if the DayType is ACT/ACT?

Answer 7

$3.97

Question 8

Consider the Following Loan:
StartDate:             13th January 1997
EndDate:              13th July 1997
Principal:              $100
Rate of Interest:   8%

Calculate the Interest Payment if the DayType is 30/360?

Answer 8

$4.00

Question 9

Consider the Following Loan:
StartDate:             13th January 1997
EndDate:              13th July 1997
Principal:              $100
Rate of Interest:   8%

Calculate the Interest Payment if the DayType is ACT/365?

Answer 9

$3.97

Question 10

Consider the Following Loan:
StartDate:             13th January 1997
EndDate:              13th July 1997
Principal:              $100
Rate of Interest:   8%

Calculate the Interest Payment if the DayType is ACT/360?

Answer 10

$4.02