Just call us Bond. Amortized bond.
Over 700 finance terms, Shmooped to perfection.
Time's always ticking—especially if you own (or pay out) bonds. Let’s say you invest in a bond that has an 8% coupon that's paid twice a year. A quarter of the year in (and half way to the first payday), your cat starts upchucking something blue, and you decide to take Miss Snuggles to the vet. To pay for it, you sell your bond. When selling your bond, you can tack on the 2% you would have earned so far in interest.
And that's the accrued interest.