# Financial Products: Day convention and compounding methods - Summary

My issue here is that I’ve been making silly mistakes regarding the compounding method and day count for several types of questions and I’m trying to identify a set of guidelines to remember what to use. If you have something to add to the below, I would really appreciate it. Product, Day Count, Calculation, Calculation 2 FRA, 360 day, 1 + r (t/360) Eurodollar & T-Bill, 360 day, r*(t/360) Cap / Floor, 360 day, (index - strke)(t days/360), (index -strike)(# of months/12) Swaps?, 360 day, All else (bonds, stock FWD, ccy FWD, stock Fut, ccy Fut, options), 365 day, (1+r)^(t/365), e^(rT) For example, one of the mistakes I’ve made is whether to take the fractional rate and then add 1, as in the FRA, as opposed to adding 1 + the rate and then taking the exponent. Also, at the moment I am drawing a blank to explain when you use the discrete and continuous calculations for the ‘all else’ item above. I know I am kind of mixing things here a bit but I thought I might as well ask for your opinion.