Monthly compounding

With Monthly compounding, each month is treated as 1/12 of a year. The Periodic Rate is determined by dividing the Nominal Annual Rate by 12 (the number of periods in a year).

Examples of how months are counted in TValue are described below. Keep in mind that all methods of evenly dividing a year into 12 convenient units have problems.

From May 1 to May 2 is one day and from May 1 to May 31 is 30 days. From May 1 to June 1 is one month.

From February 27, 2015, to June 1, 2015, (a non-leap year) is three months and two days. This is based on counting the odd days upfront, then counting the whole periods. In this case, from February 27 to March 1 is two days, and from March 1 to June 1 is three months.

You could also look at this as counting three whole months backwards from June 1 to March 1, then counting two odd days from March 1 back to February 27. The same dates in 2016 (a leap year) would produce an interval of three months and three days.

From February 1 to March 1 is one month.