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Accrued interest (ACI)

Category — Analytical Metrics
Accrued coupon interest (ACI, A, Accrued Interest) is a value measured in monetary units, and characterizing the part of coupon income, which has "accrued" from the beginning of the coupon period.

Coupon on the bonds is paid periodically, usually once every quarter, six months or a year. Accordingly, when one coupon is paid and the next coupon period begins, the coupon begins to "accrue". On the coupon due date, investors receive a coupon payment for the respective coupon period, and ACI is zero.

Calculating this indicator is important due to the fact that in most markets, bonds are traded at so-called net price excluding the ACI (there are exceptions, however: for example, in the bond market of Ukraine bonds are quoted at full price). Thus, in order to get the full price payable by the bond buyer to the seller (also known as gross price), one needs to add ACI to the net price.

In practice, there are different methods of ACI calculation:
- based on the coupon rate,
- based on the coupon amount,
- based on the coupon amount applicable on each date within the coupon period (for papers with changeable coupon rate within the coupon period).

For zero-coupon bonds, ACI is not calculated.

More information about ACI calculation and example of calculations you can find in Bond Calculator Guide.
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