When bonds are sold between interest dates, the amount of accrued interest a buyer pays is equal to the face value of the bond times the market interest rate times the portion of a year since the prior interest date.

Question

Quizplus · Accepted Answer

The accrued interest is calculated based on the bond's coupon rate, not the market interest rate, and it is the interest that has accumulated since the last interest payment date up to the sale date.

When Bonds Are Sold Between Interest Dates, the Amount of Accrued