Bond Transactions

Question 1

Dated Date

Answer 1

For a new bond issue, the date from which interest accrual begins

Question 2

Accrued Interest on Munis and Corporate

Answer 2

Calculated from the last interest payment date up to but not including the settlement date. Calculated on 360-day year and 30-day months

Principal X interest rate X elapsed days / 360 days = accrued interest

Regular way settlement (3 business days)

Question 3

Accrued Interest on Govenment

Answer 3

365- day year and actual days in month

Next business day setlement