interest computed on a 360-day year, using 12 months of 30 days, instead of a 365-day year. For instance, Treasury bill yields are quoted on a 360-day year. Corporate bonds, mortgages, and consumer installment loans with precomputed interest earn ordinary interest. With larger amounts invested, the difference between ordinary interest and exact interest (a 365 day-year) can be substantial.
simple interest based on a 360-day year rather than a 365-day year; the latter is called exact interest. The difference between the two bases when calculating daily interest on large sums of money can be substantial. The ratio of ordinary interest to exact interest is 1.0139.
simple interest based on a 360-day year rather than on a 365-day year (the latter is called exact interest). The difference between the two bases when calculating daily interest on large sums of money can be substantial. The ratio of ordinary interest to exact interest is 1.0139.
