Accrual bond

Glossary

Banking

Accrual bond

An accrual bond is a bond on which coupon payments accrue but are not paid to bondholders. Accrued interest is added to the principal amount and the bondholder receives the full amount at maturity. A zero coupon bond can be seen as a type of accrual bond: the bond is issued at a discount and the value accretes over its life and is redeemed at face value at maturity.

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