Accrued interest is the interest that is due on a bond since its last interest payment was made. A bond pays interest every six months, on dates based on its maturity date. A bondholder selling a bond between interest payment dates is entitled to the accrued interest the bond earned during the time the bondholder owned the bond. The bond buyer pays the seller the market price plus accrued interest. Accrued interest is calculated from the last coupon date up to, but not including, the settlement date. Corporate and municipal bonds calculate accrued interest on a 360-day year, and 30-day months. US Treasury bonds and US Treasury notes calculate accrued interest on a 365-day year and the actual days elapsed. Treasury bills, Treasury STRIPS, and zero coupon bonds trade without accrued interest. Bonds in default also trade without accrued interest. |