Effective Annual Rate?

[sunpak]

Hi,
Why is Effective Annual Rate calculated by taking 365 days in a year whereas any other interest rate question assumes 360 days.
Thanks!

 

[cpk123]

360 days only applies to LIBOR. Any other kind of rate is valid for 365 days.

 

[S2000magician]

cpk123 wrote:360 days only applies to LIBOR.

Which is a nominal rate, not an effective rate.
Note that bank discount yields and money market yields also use 360-day years, which, admitedly, don’t don’t appear much at Level III.