Accrued Interest
Bond issuers do not disburse coupon interest payments every
day. Instead, typically in the United States coupon interest is
paid every six months. In some countries, interest is paid
annually. For mortgage-backed and asset-backed securiti

NOTE ON ROUNDING DIFFERENCES
It is important to recognize in working through the numerical
examples and illustrations in this note that because of
rounding differences you may not be able to reproduce some
of the results precisely. I used a spreadsheet
to

The term to maturity of a bond is the number of years the
debt is outstanding or the number of years remaining prior to
final principal payment. The maturity date of a bond refers to
the date that the debt will cease to exist, at which time the
issuer wil

Fixed income analysis is the valuation of fixed income or
debt securities, and the analysis of their interest rate risk,
credit risk, and likely price behavior in hedging portfolios. The
analyst might conclude to buy, sell, hold, hedge or stay out of
the

Features of Debt Securities:
The coupon formula for an inverse floater is:
coupon rate = K L ~ (reference rate)
Where K and L are values specified in the prospectus for the
issue. For example, suppose that for a particular inverse
floater, K is 20% and L

The coupon rate, also called the nominal rate , is the
interest rate that the issuer agrees to pay each year. The
annual amount of the interest payment made to bondholders
during the term of the bond is called the coupon . The coupon
is determined by mult