QUICK DEFINITION
Accrued Interest is interest earned on a bond since its last coupon payment but not yet paid to the holder.
WHY IT MATTERS
Why Accrued Interest matters in bond markets
It explains why the cash amount paid for a bond can differ from its quoted clean price.
MARKET CONTEXT
How to think about it
Bond investors use accrued interest as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Accrued Interest important for fixed-income investors?
← Back to the Bond Market Glossary Yes. It explains why the cash amount paid for a bond can differ from its quoted clean price.