Accrued interest

Interest earned but not yet paid. When a bond sale is transacted in between coupon payment dates, the buyer has to pay the seller the flat price (dealer price) plus the accrued interest.

Full price = Flat price + Accrued interest

Accrued interest = Coupon x Proportion

Proportion = Number of days since last coupon payment / Number of days in between coupon payments

Proportion can be calculated based on Actual/Actual convention or 30/360 convention.

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