Accrued Interest - Bond Yield Accrued

Bonds pay interest at the coupon rate on a set schedule from issuance through maturity. The interest cycle can be monthly, quarterly, semi-annually, annually or at maturity. When a bond is sold in the secondary market, it is uncommon for the settlement to take place exactly on an interest payment date (Semi-annual example: there are two interest payments per year). At settlement, the buyer pays the seller the purchase price PLUS interest earned (“accrued”) by the seller from the last interest payment, up to, but not including the settlement date. This is referred to as the “accrued interest”.

BOND YIELD discussion