Interest is earned by the seller of the bond from the last interest payment date, up to the settlement date. This is referred to as the accrued interest of the bond. While it is received by the seller of the bond, it must be paid by the purchaser and is added to the purchase price of a bond. The following example illustrates how accrued interest is calculated. 83.40 Regular interest payments for this bond are June 1 and December 1.
Bonds offer investors a number of benefits.
A few of the more popular ones are outlined below. They provide the investor with regular and predictable income. This is a contractual obligation. A properly structured portfolio will include a significant proportion of bonds. It provides an investor with appropriate levels of income, safety, flexibility and opportunity.