Accrued interest must be paid by the buyer of the bond and remitted to the seller of the bond. This compensates the seller for the interest earned on the bond from the last interest payment date up to the sale date.

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Accrued Interest

Question 19

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.
E) is quoted in the bond price in the financial press and must be paid to the broker for the inconvenience of selling bonds between maturity dates.

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