Is there a rule that governs the use of either the exponentiation of interest rates (like in pricing forwards) or simple division (like in FRAs and swaps). I keep messing those up when another use of interest rates pops up (besides those mentioned above). When calculating the forward rate you use exponentiation: Ex: 100 X 1.05^60/365 = 100.81 And when calculating FRAs you use division (cause they are add-on rates, and also use 360 day year): Ex: 100 X [1 + .05 X (60/360)] = 100.83 What is the reason behind this and is there a generic rule I can use so I don’t get other uses (can’t think of one right now) of interest rates wrong.