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Accretion |
| The adjustment to the original cost of a bond purchased at a discount as the bond ages toward its maturity date. The discount will be adjusted higher over time so that the adjusted cost of the security will equal par, or 100, on the maturity date. For example, a bond purchased at a price of $95 with 5 years until maturity will have $1 added to its adjusted cost basis each of the 5 years up to the maturity date level of par, or 100. The adjustment to cost for bonds purchased at a premium is called amortization |