n NISM Certifications
NSM General NISM
Medium

What additional detail is required to convert an interest rate into a specific interest amount?

Practice question from NISM Series IV - Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Day Count basis

    Correct answer

  2. B

    Identities of debtor and lender

  3. C

    Compounding frequency

  4. D

    Both - Identities of debtor and lender and Compounding frequency

Why this is the answer

Day count conventions determine the actual interest accrued for a period.

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