Accrual bond

A bond on which interest accrues but is not paid to the investor during the time of accrual. The amount of accrued interest is added to the remaining principal of the bond and is paid at maturity.

Z Bond

A bond on which interest accrues but is not paid to the bondholder until maturity. That is, the interest is added back into the principal and further interest is calculated over the new, larger principal. A Z bond is also called an accrual bond. See also: Accretion, Balloon Mortgage.

accrual bond

See zero-coupon bond.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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