4.2.16.3 Specifying the Interest Period Basis

You can indicate how the system must consider the tenor basis upon which interest is computed over a schedule or interest period, in respect of the contract. This preference is inherited from the Interest Limits definition for the product used by the contract, and you can change the default option chosen.

You can choose any of the following options:

• Including the From Date
  The period considered for interest calculation would include the start date and exclude the end date. Therefore, the value date of the loan is considered for interest calculation and the maturity date is excluded. This would mean:

  1. For the first schedule, it would include the Value Date. Interest would be calculated for the Value Date.
  2. For the last schedule, it would exclude the Maturity Date. Interest would not be calculated for the Maturity Date.
• Including the To Date
  The period considered for interest calculation would exclude the start date and include the end date. Therefore, the value date of the loan is excluded, but the maturity date is included for interest calculation. This would mean:

  1. For the first schedule, it would exclude the Value Date. Interest would not be calculated for the Value Date.
  2. For the last schedule, it would include the Maturity Date. Interest would be calculated for the Maturity Date.
• Including both From and To Dates
  The period considered for interest calculation would include both the value date and the maturity date. This would mean:

  1. For the first schedule, it would include the Value Date. Interest would be calculated for the Value Date.
  2. For the last schedule, it would include the Maturity Date. Interest would be calculated for the Maturity Date.
• Excluding both From and To Dates
  The period considered for interest calculation would exclude both the value date and the maturity date. This would mean:

  1. For the first schedule, it would exclude the Value Date. No interest would be calculated for the Value Date.
  2. For the last schedule, it would exclude the end date. No interest would be calculated for the Maturity Date.

Example

A loan with a value of USD 400,000 is value dated 1^st January 2003 and matures on 1^st May 2003. The intermediate interest payment schedules are on 1^st February 2003, 1^st March 2003 and 1^st April 2003.

Schedule	Start Date	End Date
1	1st January 2003 (Value Date)	1st February 2003
2	1st February 2003	1st March 2003
3	1st March 2003	1st April 2003
4	1st April 2003	1st May 2003 (Maturity)

The periods considered for interest calculation for each schedule, for each of the four options, are arrived at as given below:

Include From Date

Schedule	Days from	Days To	Days for Interest Calculation
1	1st January 2003 (including)	1st February 2003	32
2	2nd February 2003	1st March 2003	28
3	2nd March 2003	1st April 2003	31
4	2nd April 2003	1st May 2003 (excluding)	29

Include To Date

Schedule	Days from	Days To	Days for Interest Calculation
1	1st January 2003 (excluding)	1st February 2003	31
2	2nd February 2003	1st March 2003	28
3	2nd March 2003	1st April 2003	31
4	2nd April 2003	1st May 2003 (including)	30

Include both From and To Dates

Schedule	Days from	Days To	Days for Interest Calculation
1	1st January 2003 (including)	1st February 2003	32
2	2nd February 2003	1st March 2003	28
3	2nd March 2003	1st April 2003	31
4	2nd April 2003	1st May 2003 (including)	30

You would notice that consequent to the first schedule, this option would work in the same manner as the Include To Date option.

Exclude From and To Dates

Schedule	Days from	Days To	Days for Interest Calculation
1	1st January 2003 (excluding)	1st February 2003	31
2	2nd February 2003	1st March 2003	28
3	2nd March 2003	1st April 2003	31
4	2nd April 2003	1st May 2003 (excluding)	29

You would notice that consequent to the first schedule, this option would work in the same manner as the Include From Date option.