Accrued Interest: Applies mainly to convertible securities. Interest that has accumulated between the most recent payment and the sale of a bond or other fixed-income security. At the time of sale, the buyer pays the seller the bond's price plus 'accrued interest,' calculated by multiplying the coupon rate by the fraction of the coupon period that has elapsed since the last payment. (If a bondholder receives $40 in coupon payments per bond semiannually and sells the bond one-quarter of the way into the coupon period, the buyer pays the seller $10 as the latter's proportion of interest earned.)

 

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Accrued Interest: Accrued interest is the interest that accumulates on a fixed-income security between one interest payment and the next. The amount is calculated by multiplying the coupon rate, also called t . . . View Full Definition

And Interest: An indication that the buyer will receive accrued interest in addition to the price quoted for a bond.

Compound Interest: When the interest you earn on an investment is added to form the new base on which future interest accumulates, it is compound interest. For example, say you earn 5% compound interest on $10 . . . View Full Definition

Net Interest Cost (NIC): The total amount of interest that will be paid on a debt obligation by a corporate or municipal bond issuer.