Accrued Bond:
A type of bond that has accumulated interest over time but has not yet been paid to the bondholder. The accrued interest is calculated from the last interest payment date up to the present date. Accrued bonds are typically traded in the secondary market, and the buyer of the bond assumes the responsibility of paying the accrued interest to the seller. The accrued interest is added to the purchase price of the bond, resulting in a higher cost for the buyer. Accrued bonds are commonly used in fixed-income investments and are subject to specific rules and regulations regarding interest calculations and payment.
Accrued bond refers to the interest that has accumulated on a bond since its last interest payment date. When a bondholder holds a bond between interest payment dates, they are entitled to receive the interest that has accrued during that period. This accrued interest is typically paid to the bondholder when the bond is sold or redeemed. Accrued bond is an important consideration for investors as it represents the compensation for the time value of money and is factored into the bond’s overall yield.
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This glossary post was last updated: 29th March 2024.
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