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Investing Glossary:
Accrued interest
Copyright 2008,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| Term: |
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| Definition: |
| 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.)
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