Accrued interest is the coupon earned since the last interest payment date. When you buy a bond between payment dates, you pay the seller this amount on top of the price, and you then receive the full next coupon.
Accrued interest = face value × coupon rate ÷ payments per year × (days since the last coupon ÷ days in the coupon period). For listed NCDs in India, SEBI requires the actual/actual day count, so the actual number of days is used.
The price before accrued interest is the clean price; the price including it is the dirty price.
Related
Related terms: Clean price and dirty price · Record date · Coupon rate
Before investing, look up the issuer: all its outstanding bonds, rating history and disclosure documents.
This page is for information only. It is not investment advice, a credit rating or a recommendation to buy, sell or hold any security. Facts are taken from the issuer's own documents and the sources linked on this page; check them with the source before investing.
