An accrual bond is a fixed-
interest
In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...
bond that is issued at its face value and erepaid at the end of the maturity period together with the accrued interest.
However, another definition states that the interest periods maybe paid periodically.
In
Germany
Germany, officially the Federal Republic of Germany, is a country in Central Europe. It lies between the Baltic Sea and the North Sea to the north and the Alps to the south. Its sixteen States of Germany, constituent states have a total popu ...
, the accrued interest is compounded.
In contrast to
zero-coupon bond
A zero-coupon bond (also discount bond or deep discount bond) is a bond in which the face value is repaid at the time of maturity. Unlike regular bonds, it does not make periodic interest payments or have so-called coupons, hence the term zer ...
s, accrual bonds have a clearly stated
coupon rate
In marketing, a coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product.
Customarily, coupons are issued by manufacturers of consumer packaged goods
or by retailers, to be used in ...
.
See also
References
Bonds (finance)
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