the actual number of days in a month. This effectively means that the borrower is paying interest for 5 or 6 additional days a year as compared to the 30/360 day count convention. Spreads and rates on Actual/360 transactions are typically lower, e.g., 9 basis points. Since monthly loan payments are the same for both methods and since the investor is being paid for an additional 5 or 6 days of interest with the Actual/360 year base, the loan’s principal is reduced at a slightly lower rate. This leaves the loan balance 1-2% higher than a 30/360 10-year loan with the same payment. Another difference between 30/360 and Actual methods regards the additivity property of the Day Count Factor, i.e. given two subsequent time intervals the property . Whereas actual methods do respect additivity, 30/360 do not. This property is relevant, for example, when one computes an integral over a time interval using a discretization rule. Business date convention Date rolling (business date) conventions are a common practice to adjust non-business days into business days. Footnotes References . The standard reference for conventions applicable to US securities. For the 30/360 US convention, this edition adds the first two rules to those given in earlier editions. . ICMA's definition of certain day count conventions. . ISDA's definition of certain day count conventions. Note that these definitions differ in some cases from the ISDA's Annex to the 2000 Definitions. . ISDA's discussion of market convergence, including an extensive discussion of irregular coupon periods. . Definition of various day counts in section 7. Further reading Bond Calculator. Online calculation of interest and rate indicators with different day count conventions, created by SIX Swiss Exchange. Pricing of Game Options (in a market with stochastic interest rates) - Section Chapter II: A Little Bit of Finance, Section 1: Brief introduction to Financial Securities, from pages 26 to 33, formally mention day count conventions. Practical Issues Arising from the Introduction of the Euro - Issue 7 (March 1998) - Chapter 4: Financial Markets and Exchanges: discusses European nations' day-count conventions and changes required to unify the day-count conventions for the EU member states. Day Count descriptions and code from Strata, a Java library of financial calculations. comparison of financial day count convention used in Excel and OOXML Interest Rate Instruments and Market Conventions Guide. A reference guide containing conventions and market standards for the most common