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.« Back to Index