Accrued interest refers to the interest that has been earned but not yet paid or received. It applies particularly to financial instruments like bonds or loans, where interest payments are typically scheduled at specific intervals, such as annually or semi-annually.
The accrued interest represents the portion of interest that has accumulated since the last payment date and is owed to the holder of the instrument. When a bond or loan is bought or sold between interest payment dates, the buyer compensates the seller for the accrued interest that has accumulated up to that point.
Comments