The Alfa Co.has a 12 percent bond outstanding on a $1,000 face value bond that pays interest on February 1 and July 1.Today is March 1 and you are planning to purchase one of these bonds.How much will you pay in accrued interest?

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Quizplus · Accepted Answer

The bond pays interest on February 1 and July 1. Today is March 1, so the accrued interest is for the period from February 1 to March 1, which is 30 days. The annual interest payment is $1,000 x 12% = $120. So the accrued interest is $120 x 30/360 = $10.