Accrual bond
Encyclopedia
An accrual bond is a fixed-interest
bond
that is issued at its face value and repaid at the end of the maturity period together with the accrued interest. In Germany
, the accrued interest is compounded. In contrast to zero-coupon bonds, accrual bonds have a clearly stated coupon rate.
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
that is issued at its face value and repaid at the end of the maturity period together with the accrued interest. In Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, the accrued interest is compounded. In contrast to zero-coupon bonds, accrual bonds have a clearly stated coupon rate.