Interest rate basis
In accounting, the accrual basis of an interest calculation is a convention whereby an interest amount is calculated from the principal, expressed in units of a specified currency, and a percentage, and an agreed start and end date. The more commonly used conventions are listed below.
(1) SemiAnnual
- <math>C = \frac{P.R.}{2} <math>
This is commonly used for bond coupon calculation
(2) Actual 365
- <math>C = P.R. \frac{(t2 - t1)}{365}<math>
where the start date t1 and end date t2 are expressed as Julian days.
Actual 365 is commonly used in the sterling markets and for "Commonwealth" currencies. In the United Kingdom, it is known as "
