General options

FinLease lets you define general compute options such as the day count convention, any end-of-month date adjustments and how it should round interest fractions.

To open the dialog in which you can specify general options, click the General options button.

To view the current settings, simply point to General options button.

Day count convention

Day count conventions specify how to count the number of days between two dates and how to calculate the size of an interest period when the number of days is a fraction of a normal period.

Day count conventions differ in assumptions on the number of days in a year as well as the number of days in a month. The notation used is d / y where:

the numerator d is the assumed number of days in a month
the denominator y is the assumed number of days in a year

The most common conventions are:

Convention	Rules
30/360	all months are assumed to have 30 days, resulting in a 360 day year if the first date falls on the 31st, it is changed to the 30th if the second date falls on the 31st, it is changed to the 30th, but only if the first date falls on the 30th or the 31st
30E/360	all months are assumed to have 30 days, resulting in a 360 day year if the first date falls on the 31st, it is changed to the 30th if the second date falls on the 31st, it is changed to the 30th
30E+/360	all months are assumed to have 30 days, resulting in a 360 day year if the first date falls on the 31st, it is changed to the 30th if the second date falls on the 31st, it is changed to the 1st and the month is increased by one
actual/360	the actual number of days between two dates is used as the numerator all years are assumed to have 360 days
actual/365	the actual number of days between two dates is used as the numerator all years are assumed to have 365 days
actual/actual	the actual number of days between two dates is used as the numerator leap years count for 366 days, non-leap years count for 365 days

Example

A series of monthly payments starts on January 31st, 2003.
What is the number of days between each payment date for a given day count convention?

From	To	30/360	30E/360	30E+/360	actual
1/31/2003	2/28/2003	28	28	28	28
2/28/2003	3/31/2003	33	32	33	31
3/31/2003	4/30/2003	30	30	30	30
4/30/2003	5/31/2003	30	30	31	31
5/31/2003	6/30/2003	30	30	30	30
6/30/2003	7/31/2003	30	30	31	31
7/31/2003	8/31/2003	30	30	31	31
8/31/2003	9/30/2003	30	30	30	30
9/30/2003	10/31/2003	30	30	31	31
10/31/2003	11/30/2003	30	30	30	30
11/30/2003	12/31/2003	30	30	31	31
12/31/2003	1/31/2004	30	30	31	31

The 30/360 day count usually produces even length months, but it has problems with intervals that include the last day of February (notice the 2 extra days from February 28th to March 31st).

The adjustment by the 30E/360 day count changes the 33 day count for the period starting on 2/28/2003 to 32.

In the example, the adjustments by the 30E+/360 day count results in a series of intervals which are almost the same as with an actual day count.

For monthly series starting on the 28th or earlier, all intervals will equal 30 days for 30 day numerator based day counts.

Which one should I use?

It depends on whether you want even lenghth intervals or whether every day should count.

In the first case you would select one of the 30 day numerator based day counts for annually, semiannually, quarterly, bimonthly, monthly or semimonthly intervals and one of the actual days based day counts if payments occur weekly or biweekly.

In the latter case, you would always choose one of the actual days based day counts.

When using one of the30 day numerator based day counts, it's best to avoid series that start on the 29th, 30th and 31st of the month as these are days that are not available in all months.

Tip

Using FinKit's Date Series calculation you can further explore what the intervals will be for a given payment frequency and day count convention, whereas the Year Fraction calculation lets you calculate time between any two dates as a fraction of a year.

Date adjustment

This option lets you specify whether the program should adjust for end-of-month dates when creating a month based date series.

Adust dates	Description
no	no adjustment is made, unless the target day is not available in the next month: in this case the last day of the month is used.
if end of month	when the start day of the payment series happens to be the last day of the month of a month with less than 31 days, the last day of the month is used for all the dates in the series.

Example

Suppose that the first of a series of monthly payments falls on the 30th of June.

When the "if end of month" option is selected, FinLease will generate a series of dates that each fall on the last day of the month: July 31th, August 31th, September 30th, October 31th, ...

When no date adjustment is selected the following series is generated: July 30th, August 30th, September 30th, October 30th, ...

Rounding method

This option lets you inform the program how it should round the interest and principal fractions of payments. Normally you would leave this option set to "round to nearest".

Rounding method	Description
round to nearest	values are rounded up or down to the nearest value
round up	values are rounded up to the same precision as the start value
round down	values are rounded down to the same precision as the start value
no rounding	values are only rounded on screen, internally they are not rounded

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