Accrued Interest

Accrued interest is the interest that is due on a bond since its last interest payment was made. A typical bond pays interest every six months, on dates based on its maturity date. A bond holder who sells a bond between interest payment dates is entitled to the accrued interest the bond earned during the time the bond holder owned the bond. The bond buyer pays the seller the market price plus accrued interest. Accrued interest is calculated from the last coupon date up to, but not including the settlement date.

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