Accrued interest is the interest that has accumulated on a bond since the last interest payment up to the purchase date. The buyer of the bond must pay this accrued interest to the seller, as the seller is entitled to the interest earned up to the sale date.

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Accrued Interest

Question 13

Multiple Choice

Accrued interest

A) is quoted in the bond price in the financial press.
B) must be paid by the buyer of the bond and remitted to the seller of the bond.
C) must be paid to the broker for the inconvenience of selling bonds between maturity dates.
D) is quoted in the bond price in the financial press and must be paid by the buyer of the bond and remitted to the seller of the bond.

Correct Answer: