When you are trying to calculate a period rate (For example, 120 days), when do you use powers and when do you just multiple by days over 360? I have seen it used both ways in the notes, and its really confusing me. Is there a reason, or is it just an approximation vs accuracy thing. Example: rfr = 4 t = 120 days sometimes I see the calc as 0.04*(120/360) + 1 sometimes i see the calc as 1.04^(120/360)
To the power means compounding and multiplication means simple interest. Most of the time, they are approximately the same. For long periods, it will make a difference