Day count convention is a system used to determine the number of days between two coupon dates. It is important in calculating accrued interest and present value when the next coupon payment is less than a full coupon period. Each bond market has its own daycount convention. In calculating the number of days between two dates, the actual number of days is not always the same as the number of days that should be used in the accrued interest formula. The number of days used depend on the day count conventions for the particular securities. Few of the day count conventions used in the bond market are: A 30/360 day count convention, where 30 days in a month and 360 days in a year are considered; actual / actual day-count convention, where actual number of days in a month and year are considered.

Posted Date: 9/10/2012 6:04:32 AM | Location : United States

Ask an Expert

Related Discussions:- Day count convention, Assignment Help, Ask Question on Day count convention, Get Answer, Expert's Help, Day count convention Discussions

Write discussion on Day count convention
Your posts are moderated

Write your message here..

Related Questions

Private sector securities - inter corporate investments, Corporates g... Corporates generally raise funds from the Inter Corporate Deposit (ICD) markets. These instruments generally carry interest rates higher than the other short-term

Cost of capital, COST OF CAPITAL A project's Cost of Capital is the sm... COST OF CAPITAL A project's Cost of Capital is the smallest amount of acceptable rate of return/required rate of return on funds committed to the project. It is a compensation

What do you mean by variable working capital, Q. What do you mean by Variab... Q. What do you mean by Variable working capital? Permanent or fixed: Permanent or fixed working capital is the minimum amount which is required to ensure effective utilization

Accounting principle, Accounting Principle Accounting principles are t... Accounting Principle Accounting principles are the primary assumptions, rules of operation, and necessary features that make up the framework for the construction of accountin

What do you mean by shares, Q. What do you mean by Shares? Shares: issu... Q. What do you mean by Shares? Shares: issue of the share is the most important source of the long terms capital. A company can issue various type of the share as the equity an

Explain difference between business risk and financial risk, What is the di... What is the difference between business risk and financial risk? Business risk considers to the uncertainty a company has regarding to its operating income (as well termed as ear

Describe factors to analyze a company position, Q. Describe Factors to Anal... Q. Describe Factors to Analyze a Company position? - Venture capitalists may be involved in the business because of its significant growth but poorly structured finance. An equ

Design a digital option as a sequence of calls, An individual agent thinks ... An individual agent thinks that there is a high probability that the Dow Jones will have a payoff (or points) between a=10000 and b=12000 at t=1. Design a digital option (see Fi

Define the problems into capital budgeting analysis, What problems can take... What problems can take place into the capital budgeting analysis if project debt is evaluated in place of the borrowing capacity created by the project? If project debt is grea

Loan schedules - fixed vs floating, Consider a mortgage example to nance ... Consider a mortgage example to nance the purchase of a house or flat. You may use a real example or create a ctitious one. Search for dierent types of mortgages currently on oe