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|-|Every [[Bond|bond]] market has its own system of determining the number of days in a year and even the number of days between two [[Coupon|coupon]] dates . These different methods are referred to as daycount conventions and are important when calculating [[Accrued Interest|accrued interest]] and [[Present Value|present value]] (when the next coupon is less than a full coupon period away). |+|
the number of days between two [[Coupon|coupon]] dates to important [[Accrued Interest|accrued interest]] and [[Present Value|present value]] is a .
|-|See also: [[Coupon]] |+|
Daycount conventions are used to determine the number of days between two coupon dates in order to determine the fraction of a year the period represents. This is important as it affects the amount of accrued interest on a bond and the present value of future coupons. One convention is based on the assumption that there are 30 days each month and 360 days each year; another uses the actual number of days between dates and a divisor of 360; yet another uses the actual number of days and a divisor of 365.