The 30/360 convention calculates the daily interest using a
360-day
year and then multiplies that by 30 days (standardized month). Interest is only applied to the first
30
days of the month. This convention recognizes 3 days' worth of interest on February 28.
The Actual/Actual convention calculates the daily interest using the actual
number
of days in the year and then multiplies that by the actual number of days in each month. The total
interest varies from month to month.
The Actual/360 convention calculates the daily interest using a 360-day
year and then multiplies that by the actual number of days in each period. The total interest varies
from month to month.
The Actual/365 convention calculates the daily interest using a 365-day
year and then multiplies that by the actual number of days in each period. The total interest varies
from month to month.