Page 49 - P6 Slide Taxation - Lecture Day 6 - Groups, Interest And Practice Questions

Accrual amount

Calculate the spread of interest

Spreads interest on a

A = B x C compounding accrual basis

over the term of the
instrument

• A = Accrual amount Apportion if

Will be provided in exam accrual period is

• B = Yield to maturity not the same as

yoa (days/365)

• C = Adjusted initial amount
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