5566

I remember from Lvl I that the way a rate is quoted is by convention .


Strictly speaking the TVM calculation would NOT treat a rate over a longer period as a simple linear increase over a shorter period:

R1 = 1+ (R * 90/360)
R2 = 1+ (R * 180/360)

The add-on rates are simple multiples of the base annualized rate at a point of time.

That's the way the LIBOR rates are quoted and used . So lets not argue about that.

TVM would say:

R2 = Sqrt( (1+R1)^2) - 1

But LIBOR does not use a TVM calc for quoting , it uses the above "add-on" way.