Accrued Interest: Earned Before Cash Arrives
Summary
Hollow Point Trading shares a short explainer on accrued interest: interest earned on a security but not yet paid. Using a bond with a $30 coupon, it shows how one-third of a coupon period can accrue before the scheduled payment date, clarifying the difference between earned interest and cash received.
https://youtu.be/rcI2BSfIYYg
Earned interest is not always cash already received #Shorts
Interest can be earned before cash arrives. Accrued interest means interest earned on a security but not yet paid to the investor. That distinction matters when a bond pays coupons only on specified dates. Imagine a bond promises a thirty dollar coupon for a coupon period. If exactly one third of that period has accrued under its applicable conv...
