Green Finance Study Group and Money market: Difference between pages
imported>Doug Williamson (Create page. Source: G20 webpage https://www.g20-insights.org/policy_briefs/green-fiscal-reform-for-a-just-energy-transition-in-latin-america/) |
imported>Doug Williamson (Link with Leap year page.) |
||
Line 1: | Line 1: | ||
Money markets trade short-term financial instruments, generally with a life up to one year. | |||
( | Securities are generally quoted on the basis of a simple nominal annual interest rate (or yield) or a simple nominal annual discount rate. | ||
Important short term interest conventions are: | |||
1. | |||
For GBP yield instruments: Actual / 365 fixed days. | |||
So Simple periodic interest = Quoted nominal annual rate x (Actual days) / 365. | |||
This applies in leap years as well as in normal years. | |||
<span style="color:#4B0082">'''Example 1'''</span> | |||
A 272 day GBP yield instrument quoted at 4% would pay periodic interest of: | |||
= 4% x 272 / 365 | |||
= 2.9808% per 272 day period. | |||
2. | |||
For EUR, USD and most other currencies yield instruments: Actual / 360 days. | |||
So Simple periodic interest = Quoted nominal annual rate x [Actual days] / 360. | |||
<span style="color:#4B0082">'''Example 2'''</span> | |||
A 272 day USD yield instrument quoted at 4% pays periodic interest of: | |||
= 4% x 272 / 360 | |||
= 3.0222% per 272 day period. | |||
== See also == | == See also == | ||
* [[ | * [[ACT/360]] | ||
* [[ | * [[ACT/365 fixed]] | ||
* [[ | * [[Capital market]] | ||
* [[ | * [[Depo market]] | ||
* [[ | * [[International money market]] | ||
* [[ | * [[Leap year]] | ||
* [[ | * [[Market]] | ||
* [[ | * [[Money market fund]] | ||
* [[ | * [[Money market fund reform: a light at the end of the tunnel?]] | ||
* [[ | * [[Money market lines]] | ||
* [[ | * [[Nominal annual rate]] | ||
* [[Simple interest]] | |||
* [[Wholesale markets]] | |||
[[Category: | [[Category:Long_term_funding]] | ||
Revision as of 19:12, 12 March 2016
Money markets trade short-term financial instruments, generally with a life up to one year.
Securities are generally quoted on the basis of a simple nominal annual interest rate (or yield) or a simple nominal annual discount rate.
Important short term interest conventions are:
1.
For GBP yield instruments: Actual / 365 fixed days.
So Simple periodic interest = Quoted nominal annual rate x (Actual days) / 365.
This applies in leap years as well as in normal years.
Example 1
A 272 day GBP yield instrument quoted at 4% would pay periodic interest of:
= 4% x 272 / 365
= 2.9808% per 272 day period.
2.
For EUR, USD and most other currencies yield instruments: Actual / 360 days.
So Simple periodic interest = Quoted nominal annual rate x [Actual days] / 360.
Example 2
A 272 day USD yield instrument quoted at 4% pays periodic interest of:
= 4% x 272 / 360
= 3.0222% per 272 day period.