When do we assume to use 360 days versus 365 days? Ugh I am so sick of memorizing these formulas, in what real world application would you ever not have these formulas in front of you?!
Feel you pain bro!
For LIBOR always used 360.
For calculating PV’s and FV’s based on compound interest use 365. Note that LIBOR is not annualized using compound interest.
Yields quoted on a discount basis also have the discount annualized over a 360-day year. (I think)
Try not to question the use of 360 vs. 365 in the formulas. You might be more than confused in some applications…
MMY, DBY, Most Derivatives, except some our tailored so it can be based on 365 instead of 360.
My concern is forgetting to when to put the 360 vs 365 in the denominator or numerator when raising it to the ^…lol
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