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in the context of bonds, accrued interest: group of answer choices a) is discounted along with other cash flows to arrive at the dirty, or full price. b) covers the part of the next coupon payment not earned by seller. c) equals interest earned from the previous coupon to the sale date.

Respuesta :

Option C. equals interest earned from the previous coupon at the same rate is the correct answer.

Accrued interest is the total amount of interest that has been generated but has not yet been paid on an obligation, such as a bond. Option C's definition of accumulated interest on bonds is accurate. The alternative options are false. Not just bonds with payment intervals over a year, but all bonds with periodic coupon payments may accrue interest. When determining the bond's price, accrued interest is not deducted. Option b. It should read "not earned by the buyer" instead of "covers the part of the next coupon payment not earned by the seller."

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