Collections:
Other Resources:
"Act/365" - Leap Years
What is the impact of leap year on the "Act/365", or "Actual/365" Day Count Convention?
✍: FYIcenter.com
If look at the Accrued Interest on your term deposit
in a leap year, you will see a higher amount than regular years.
Here is an example of a 5-year term deposit:
Principal: $1,000.00 Interest Method: Simple Interest Interest Frequency: 12 (Monthly) Interest Rate: 5.00% Day Count Convention: Act/365 Term: 5 years Start date: 2023-01-01 Maturity date: 2028-01-01
Here is how you can calculate the Accrued Interest in the date range of [T1,T2) = [2023-01-01, 2024-01-01), which is a regular year:
T1 = 2023-01-01: Starting date (inclusive) T2 = 2024-01-01: Ending date (exclusive) of the Accrual Range T3 = 2023-02-01: Ending date (exclusive) of the Accrual Period T4 = 2028-01-01: Ending date (exclusive) of the Accrual Year DiR(T1,T2) = DiR(T1,T2) = Calendar_Days(T1,T2) = 365 DiY(T1,T2) = 365 Day_Count_Factor(T1,T2) = DiR(T1,T2) / DiY(T1,T2) = 365 / 365 = 1.0 Accrued_Interest = Principal × Interest_Rate × Day_Count_Factor = $1,000.00 × 5.0% × 1.0 = $50.00
Now let's see Accrued Interest in another date range of [T1,T2) = [2024-01-01, 2025-01-01), which is a leap year:
T1 = 2024-01-01: Starting date (inclusive) T2 = 2025-01-01: Ending date (exclusive) of the Accrual Range T3 = 2024-02-01: Ending date (exclusive) of the Accrual Period T4 = 2028-01-01: Ending date (exclusive) of the Accrual Year DiR(T1,T2) = DiR(T1,T2) = Calendar_Days(T1,T2) = 366 DiY(T1,T2) = 365 Day_Count_Factor(T1,T2) = DiR(T1,T2) / DiY(T1,T2) = 366 / 365 = 1.0027397260274 Accrued_Interest = Principal × Interest_Rate × Day_Count_Factor = $1,000.00 × 5.0% × 1.0027397260274 = $50.13698630137 = $50.14
So you earn an extra interest of $0.14 on a leap year.
⇒ "Act/365" - Daily Compound Interest
⇐ "Act/365" - Cross-Period Accrual
2026-02-04, ∼154🔥, 0💬
Popular Posts:
If you know the CUSIP of a US Treasury security, you can lookup its issuing information with our sea...
What is the performance of the Amazon.com, Inc. (NasdaqGS: AMZN) stock? The performance of the Amazo...
What are Historical Values of the US Unadjusted MoM (Month over Month) Inflation Rates? Here are His...
What is the performance of the Amazon.com, Inc. (NasdaqGS: AMZN) stock? The performance of the Amazo...
What is the ICE BofAML MOVE Index (NYSE: ^MOVE) index? What are the historical values of the ^MOVE i...