# When to use actual date and when to use 360.

Schweser Book4 Page 215, Q9:

It is asking to calculate the effective interest payment.

The answer have used 184 and 181 for February 1 and Augest 1 date count. And calculate the interest payments using 184/360 and 181/360. Which in total is 365/360. It’s actually paying more than stated LIBOR.

I am just confused why shouldn’t we just use 180/360??

Any one can clearify this for me?

It’s my understanding that you should:

Use 360 only for LIBOR calculations. i.e., if 30-day LIBOR is x%, then the effective interest over that period is x%*30/360.

Use 365 for everything else.

I agree with CCC. use 30/ 360 with Libor only. all else actual daycount.

Thanks for the reply. However, just what do you mean use for LIBOR.

The example I mentioned used the 184/360 times LIBOR rate(plus 240 basis point), do you consider this a LIBOR calculation?

IF not, what does consider to be LIBOR calculation, and what doesn’t?

I am really confused guys.

THanks for helping

Yes.

Then why using 184 instead of 180?

You have to count the actual days in the period, then divide it by 360 if it’s a LIBOR calculation. That’s just the convention.