Method of calculating interest, including accrued interest, on an instrument based on a calendar of twelve 30 day months. With this method interest does not accrue on the 31st of a month and there is always assumed to be three days between 28 February and 1 March. This method originally arose in the pre-computer era. There are slight differences to the calculations in North America and Europe.
AAA or Aaa
The highest security risk rating awarded to a bond or issuer by a rating agency. Standard & Poor and Fitch rate such securities AAA, whereas Moody rates them Aaa.
See ‘Asset-backed security’.
Bonds normally pay predefined interest amounts on predefined days. Accrued interest is the interest earned on the bond since the last interest date or, in the case of a new issue from the issue date, up to the value date. When buying or selling a bond, the accrued interest is usually added to, or in a few markets immediately before a coupon payment, when the seller keeps it, deducted from the price of the bond.
Method of calculating accrued interest on a daily basis based on the number of actual calendar days since the last coupon date or for a new issue from the issue date, divided by the actual calendar days in the period.
See ‘American Depository Receipt’.
See ‘Annual equivalent rate’.
The dirty or gross price of a security.
American Depository Receipt
The shares of a non-US company that have ...