Question

6) Accrued interest is paid on bonds that are issued between interest dates. *

1 point

True

False

Answer 1

Yes. The statement is TRUE. When a bond issued between interest dates , the interest will be accumulated from the date of the issue of the bond till the date of the next payment of interest.

Bonds are credit instruments which are used to raise capital by a business. Interest is paid periodically to the bondholders(semi annual/quarterly/monthly/annually) per the terms of the agreement. Incase the bonds are issued at a time other than when the interest payments are due, the interest gets accrued on the bond until the interest payment cycle arrives, during when, this interest will be paid to the Bondholder.

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