Calendar

Businesses operate based on specific periods such as monthly, quarterly, or semi-annually. They prefer a fixed payment amount for each period, rather than one that fluctuates based on payment timing. Reducing the payment by a few cents due to earlier payment can create more complications than benefits.

One common approach is using the 30/360 day-count convention, which deviates from the regular monthly calendar. Here's how it works:

• Each year is divided into 12 equal months. This ensures that the yield generated each month is the same, regardless of whether the month has 31 or 28 days.

• To calculate the number of days that have passed in a month, we use the lesser of the days passed, or 30. For instance, on the 10th of a month, it's 10, but on the 31st of a month, it's 30.

• To figure out how many days remain in a month, we subtract the days passed from 30. For example, it's always 20 on the 10th of a month, whether it's February, March, or April. It drops to 0 on the 30th or 31st of the month.

• Each quarter is treated as three 30-day months.

• Each semi-annual period comprises six 30-day months.

In V2 contracts, the 30/360 day-count convention is used for most time-related calculations, including yield, late fees, and due date calculations for borrowers, as well as yield calculations in the FixedSeniorTranchesPolicy for lenders. The exceptions to this rule are the "withdrawal lockout period" and "default grace period", which are both counted in actual calendar days.

All times are in UTC.