There are several different conventions used when counting the number of days in a month and number of days in a year to determine interest on a loan or investment. days-basis is used to indicate how days are counted for a specific investment or loan and is often specified in the legal documents or by market practice.
days-basis is a modal value. It is specified as the number 0, 1, 2, 3, or 4.
A value of 0 specifies that for purposes of computing interest, each full month will contain 30 days and each full year will contain 360 days, using the NASD method for dates falling on the 31st of a month. This is commonly known as the 30/360 convention. This is the default value.
A value of 1 specifies that the actual number of days will be used for each full month and the actual number of days will be used for each year. This is commonly known as the actual/actual convention.
A value of 2 specifies that the actual number of days will be used for each full month and each full year will contain 360 days. This is commonly known as the actual/360 convention.
A value of 3 specifies that the actual number of days will be used for each full month and each full year will contain 365 days. This is commonly known as the actual/365 convention.
A value of 4 specifies that each full month will contain 30 days and each full year will contain 360 days, using the European method for dates falling on the 31st of a month. This is commonly known as the European 30/360 convention.