Accrued Interest
Accrued interest is the interest that accumulates on a loan or bond between payment periods but hasn’t yet been paid to the lender. In investment contexts, accrued interest impacts bond pricing and is often settled when bonds are traded. It’s critical for accounting and cash flow management, especially in funds managing debt instruments. Keeping track of accrued interest ensures accurate financial reporting.
Key Takeaways
- Unpaid interest accumulating on loans or bonds.
- Impacts bond pricing and trading settlements.
- Important for accounting and cash flow management.
- Ensures accurate financial reporting for debt instruments.
