ACCRETED VALUE
Unlike a current interest bond which pays out interest on a regular basis, a zero coupon bond compounds it’s value as it approaches maturity, when its accreted value will be par ($100.00), effectively paying all of the interest earned, at maturity date. The rate at which it increases is a function of it’s interest rate. The accreted value is the compounded value for a zero coupon bond for a particular day. The accreted value may or may not be the same as the market value. On taxable zero coupon bonds, taxes may be due each year on that year’s accretion, rather than when the bonds mature. See also Par and zero Coupon Bond. | ||||
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ACCRETED VALUE definition was found in categories: Business & Finance(1)
ACCRETED VALUE Definition from Business & Finance Dictionaries & Glossaries
| Bond Professor's Glossary |
Accreted Value
The price of the Zero Coupon Bond on the Call Date as calculated using the original interest rate to maturity as the Yield, the Call Date as the Settlement Date, and the Maturity of the Bond.
The price of the Zero Coupon Bond on the Call Date as calculated using the original interest rate to maturity as the Yield, the Call Date as the Settlement Date, and the Maturity of the Bond.