The accrued interest of a bond refers to the interest that has been earned on the bond but has not been paid yet. Keep in mind that:
- This interest accumulates from the time a bond coupon is issued until the coupon payment is made.
- When investing in bonds, the buyer must pay the accrued interest to the seller, which is included in the total purchase price. Please keep in mind that the accrued interest comes on top of the quotation.
- The closer to the interest date, the higher accrued interest must be paid from the buyer to the seller.
- You can find the value of the accrued interest charged or credited in the respective transaction document.