If contract rate settlement rate, then the interest differential equals:
(settlement rate - contract rate) × (days in contract period / 360) × notional amount

Question

If contract rate > settlement rate, then the interest differential equals:
(settlement rate - contract rate) × (days in contract period / 360) × notional amount

Quizplus · Accepted Answer

The interest differential formula given is incorrect for the scenario where the contract rate is greater than the settlement rate. The correct formula would involve subtracting the contract rate from the settlement rate, which is the opposite of what is stated.

If Contract Rate > Settlement Rate, Then the Interest Differential