Interest that is due on a bond
or other fixed income
security since the last interest payment was made.
This often occurs for bonds purchased on the secondary market
, since bonds usually pay interest every six months, but the interest is accrue
d by the bondholders every month.
When a bond is sold, the buyer pays the seller the market price plus the accrued interest, for which the buyer will be reimburse
d at the end of the six-month period.
Accrued interest is calculated on a 30-day month for corporate bonds
and municipal bonds
, and on actual-calendar-days for Government Bonds
. Income bonds
, bonds in default and zero-coupon bonds
trade without accrued interest.