What is Accrued Interest?

Accrued interest is the cumulative unpaid interest on the bond since the last interest payment. When buying and selling bonds, the settlement price for bond sales should be the market price of the bond plus accrued interest, that is, the buyer should pay the seller the bond market price plus accrued interest. However, because the bond has two forms of final value interest payment and interest-increasing coupon sub-payment, the above-mentioned settlement price will only occur in the transaction of interest-increasing coupon sub-payment coupons. At the same time, it should be noted that income bonds are an exception, because income bonds pay interest only when they are profitable. ^[1]

Accrued interest

The bond is sold before the interest payment date. The interest is not owned by the seller, but the buyer must

The calculation formula for accrued interest is as follows

The Commercial Press's "English-Chinese Dictionary of Securities Investment" explains: accrued interest English: accrued interest. Also known as: Interest to be paid . First name . Uncountable. The unpaid interest, such as bonds or other fixed income investment products, accrued the interest accrued after the previous interest payment. When an investor purchases such an investment product between two interest payment dates, the purchase price is usually the market price plus all the accrued interest accumulated after a certain interest payment date.