A day count convention that is used to determine the actual number of days that have gone by since the beginning of an interest accrual interval. Actual/360 is calculated by dividing the actual number of days by 360. The resulting figure is, then, used in finding out the amount of interest that has accrued on a fixed income instrument. The actual/ 360 is the basis for calculating the interest due on money market instruments (especially in the United States) such as REPOs, CDs, Eurodollar deposits, etc. LIBOR is quoted on an actual/360 basis for all currencies except pound sterling (which is quoted on an actual/365 basis).

For example, the interest earned in 30 days is exactly one twelfth of the quoted rate, whilst the interest earned in one year of 365 days is 365/360 times the quoted rate. Therefore if the quoted rate is 6%, then:

Interest accrued for 30 days is 30/360 x 6%= 0.5%

Interest accrued for one year is 365/360 x 6% = 6.0833%