What is ‘Daily Factor’
A decimal representing the portion of an annual yield earned in one day. Daily factors are often reported alongside current annualized yield figures, and can be translated back to the current yield by multiplying the number by 365.
Explaining ‘Daily Factor’
For example, a certificate of deposit that trades for a current annual yield of 5.35% will show a daily factor of (.0535 / 365) or .000146575
Daily factors are small amounts to be sure, but many high-level banking and trust institutions will provide this daily interest calculation to their most important institutional accounts. The larger the pool of invested assets becomes, the more meaningful a daily factor calculation will be to the current account balances.
Daily factors are also frequently shown for Treasury bond quotes.
Further Reading
- Should macroeconomic forecasters use daily financial data and how? – www.tandfonline.com [PDF]
- A simple test of the Fama and French model using daily data: Australian evidence – www.tandfonline.com [PDF]
- Daily weather effects on the returns of Australian stock indices – www.tandfonline.com [PDF]
- Long run trends and volatility spillovers in daily exchange rates – www.tandfonline.com [PDF]
- Using daily range data to calibrate volatility diffusions and extract the forward integrated variance – www.mitpressjournals.org [PDF]
- The economics of the daily newspaper industry – books.google.com [PDF]
- Capital market efficiency and the predictability of daily returns – www.tandfonline.com [PDF]
- Seasonality, risk and return in daily COMEX gold and silver data 1982–2002 – www.tandfonline.com [PDF]
- Daily momentum and contrarian behavior of index fund investors – www.cambridge.org [PDF]
