How many days are in a compounding period for daily compounding?

In the context of daily compounding, it is common practice to consider the number of days in a year used for calculations. The choice of 360 days is often used in finance for simplicity, particularly in interest calculations, such as those involving bonds or loans, allowing for easier division and calculation of interest accrual over shorter periods. This method is frequently referred to as the "Banker's Year."

However, when discussing daily compounding in a more traditional sense or when it comes to most standard financial calculations, the actual number of days is 365. This allows for a more accurate representation of how interest accrues throughout the actual calendar year.

Selecting 365 days is important for accurate real-world applications, especially when you want to apply precise interest calculations that reflect a full year. Thus, for daily compounding, using 365 days is consistent with typical financial practices which reflect the true number of days in a year.