Accrued Interest

You invest in a bond that has an 8% coupon. It pays interest twice a year. A quarter of the year in (and half way to the first interest payment), 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. Only a quarter of the year has passed, so a quarter of the annual 8 percent interest gets paid. That's the amount that has accrued.