An assumption used to calculate the frequency of
coupon payments for a
bond. This is used to calculate
accrued interest and may therefore be important to the
valuation of a bond, especially just before or just after the
coupon date. There are two main day-count conventions. The 30/360 convention assumes that there are 30 days each month and 360 days in a year. On the other hand, the
actual/actual convention uses the real number of days each month and year.