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Over 700 finance terms, Shmooped to perfection.
What a term.
In finance, it's the date on which interest begins to accrue (grow) on a fixed-income security (like a fixed-rate government bond, for example). Investors who buy a fixed-income security between interest payment dates must also pay the seller or issuer any interest that has accrued from the dated date to the purchase date, or settlement date, in addition to the face value.
If you have your eye on a $1,000 fixed-rate government bond for January–June and you buy the bond in March, you're going to pay for the bond and you're going to pay the interest that would have been due between January and March.