365 days vs 360 days

CFA Level III Fixed Income
#1

HI

can someone summarize when we have to use 360 days and when 365 days? When we annualize a weekly or monthly return we have to use 365 days but I think working with any financial instrument we have to use 360 days in our calculations, is that correct?

Thanks,

Gerhard

#2

From what I’ve seen is that you’re correct. I’ve only encountered 365 day count when calculating EAR. 30/360 or actual/360 in cases like interest payments, option pay-offs etc.

#3

360 T - Bills and I think Munis but not sure for those. You feel free to use 365 day count everywhere else. I think also LIBOR is quoted on 360 basis but it will prove Mr. Magician.