A bond that pays no coupons, is sold at a deep discount to its face value, and matures at its face value. An accrual bond has the important advantage of being free from reinvestment risk, though the downside is that there is no opportunity to enjoy the effects of a rise in market interest rates. Also, such bonds tend to be very sensitive to changes in interest rates, since there are no coupon payments to reduce the impact of interest rate changes. In addition, markets for zero-coupon bonds are relatively illiquid. Under U.S. tax law, the imputed interest on a zero-coupon bond is taxable as it accrues, even though there is no cash flow. also called zero-coupon bond.
Related information about accrual bond:
- Accrual Bond Definition | Investopedia
A bond that does not pay periodic interest payments. Instead, interest is added to the principal balance of the bond and is either paid at maturity or, at some point ...
- Accrual bond - Wikipedia, the free encyclopedia
An accrual bond is a fixed-interest bond that is issued at its face value and repaid at the end of the maturity period together with the accrued interest. In Germany ...
- What is accrual bond? definition and meaning - InvestorWords.com
Definition of accrual bond: A bond that pays no coupons, is sold at a deep discount to its face value, and matures at its face value. An accrual bond has the ...
- Accrual Bond - Financial Dictionary - The Free Dictionary
A bond on which interest accrues but is not paid to the investor during the time of accrual. The amount of accrued interest is added to the remaining principal of ...
- What is accrual bond? - BusinessDictionary.com
Definition of accrual bond: Long-term (20 to 25 years) US corporate bond that does not pay periodic interest but instead accrues it until maturity and, although ...
- Accrual Bond
An accrual bond is more commonly referred to as a zero coupon bond. It is a type of ... Savings bonds are a popular form of the accrual bond or zero coupon bond.
- What is an Accrual Bond?
An example of a type of bond that carries a fixed interest, the accrual bond is issued at the face value of the bond, and will earn a specified rate of interest that ...
- What is ACCRUAL BOND? - The Law Dictionary
Definition of ACCRUAL BOND: A long term bond with no periodic interest but accrues until maturity. It has a specific coupon rate. AKA accretion bond or zbond.