Page 10 - Chapter 23 - Interest

Accrual Amount

Calculate The Spread Of Interest

Spreads interest on a
A = B x C basis over the term of the
compounding accrual

instrument
 A = Accrual amount Apportion if

 B = Yield to maturity Will be provided in exam accrual period
is not the same

 C = Adjusted initial amount as yoa
(days/365)

Initial amount = issue price or transfer price

Receives Holder Issuer
interest Pays

Adjusted initial amount= Adjusted initial amount= interest

Initial amount Initial amount

ADD: accrual amount (previous periods) ADD: accrual amount (previous periods)

ADD: payments made ADD: payments received
LESS: payments received LESS: payments made