- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 6. Fixed-Income Bond Valuation: Prices and Yields
- Subject 2. Flat Price, Accrued Interest, and the Full Price
CFA Practice Question
Accrued interest is defined as ______.
B. being equal to or less than the reference rate as long as the reference rate is within a certain range at the reset date
C. the amount of interest accrued since the last coupon payment; usually the bond seller must pay the bond buyer the accrued interest
A. the amount of interest accrued since the last coupon payment; usually the bond buyer must pay the bond seller the accrued interest
B. being equal to or less than the reference rate as long as the reference rate is within a certain range at the reset date
C. the amount of interest accrued since the last coupon payment; usually the bond seller must pay the bond buyer the accrued interest
Correct Answer: A
User Contributed Comments 4
| User | Comment |
|---|---|
| SSPatel | The accrued interest belongs to the seller but will not be paid until the coupon date; therefore, the new bondholder will receive the seller's portion of the interest too. |
| Bibhu | This comes when Bond has a new buyer. The new buyer has to pay accrued interest to the bond seller for elapsed time. |
| johntan1979 | A is the norm, which is dirty C is clean |
| thevinu | So dirty is the norm? Shame on me for thinking the default way is clean.. |