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Accrued Interest |
| Interest earned on a bond that has not yet been realized through a coupon payment. Buyers of bonds pay the seller the bond's price plus accrued interest that has accumulated between coupon payments, but has not yet been paid -- most bonds pay interest once every six months. Accrued interest is calculated by multiplying the coupon rate times the number of days since the last coupon payment date. Depending on the type of bond, the accrued interest calculation uses one of several day count conventions for calculating the difference between two dates. The two most common day count conventions are Actual/Actual and 30/360. |