A day count convention that is used to determine the actual number of days that have elapsed relative to the actual number of days in the reference period (the period between coupon payments). This method is used for Treasury bonds (in the Unites States). For example, suppose a bond with coupon dates: March 1 and September 1. If interest between those two dates is USD6, then the interest earned between, say, March 1 and July 20 would be:
(actual number of days / actual number of days in the reference period) x interest coupon
That is: (141/ 184) x 6 or 4.5978
