Definition

Accrued interest

Accrued interest applies mainly to convertible securities. Interest that has accumulated between the most recent payment and the sale of a bond or other fixed-income security. At the time of sale, the buyer pays the seller the bond's price plus "accrued interest," calculated by multiplying the coupon rate by the fraction of the coupon period that has elapsed since the last payment. (If a bondholder receives $40 in coupon payments per bond semiannually and sells the bond one-quarter of the way into the coupon period, the buyer pays the seller
$10 as the latter's proportion of interest earned.)

Share it:  Cite

More from this Section

  • Bank holding company
    Bank holding company is a corporation chartered for the purpose of holding the stock (equity ...
  • Unit Banking Organization
    In the unit banking system, the banking operations are carried through a single office ...
  • Accommodating policy
    Accommodating policy is an activist policy in pursuit of a high employment target. ...
  • Bank holding companies
    Bank holding companies is the companies that own one or more banks. ...
  • Present value
    The amount that must be invested today at a given rate of interest over a specified time ...