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Interest that is due on a bond or other fixed income security since the last interest payment was made. This often occurs for bonds purchased on the secondary market, since bonds usually pay interest every six months, but the interest is accrued by the bondholders every month. When a bond is sold, the buyer pays the seller the market price plus the accrued interest, for which the buyer will be reimbursed at the end of the six-month period. Accrued interest is calculated on a 30-day month for corporate bonds and municipal bonds, and on actual-calendar-days for Government Bonds. Income bonds, bonds in default and zero-coupon bonds trade without accrued interest.

The subject matter contained in this newsletter is often complex, with nuances that cannot be fully described in a single article or announcement. It is therefore vital that you consult with us -- and your legal and investment advisors, as appropriate -- before implementing ideas contained in the newsletter. Bader Martin, PS is not responsible for misinterpretations, errors, or omissions related to the content of this newsletter. Nor are we responsible for its applicability to your personal, business, or tax situation.