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
accrued 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
reimbursed 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.