You have a corporate bond that pays interest every six months. Its par value is $1,000 and it carries a coupon rate of 10%. What is your accrued interest on the bond if it has been four months since interest was last paid?

Question

Quizplus · Accepted Answer

The bond pays interest semi-annually, so it pays $50 every six months (10% of $1,000 par value divided by 2). Since it has been four months since the last payment, the accrued interest is 4/6 of $50, which is $33.33.

You Have a Corporate Bond That Pays Interest Every Six