
Brokerage Office Procedure  Accrued Interest For Government Notes And Bonds
The calculation for accrued interest on US government securities uses an actual calendar year and each month contains the actual number of days. Keep in mind that interest accrues up to, but not including, settlement date and, because US government securities settle on the next business day, interest accrues only up to the trade date.
Example:
An investor purchases 10M 8% US Treasury bonds due January 1st 2030 on Monday
April 1st for regular way settlement. How much accrued interest will the investor owe?
(10,000 x 8%) X (91 /365) =
800 X .2493 = $199.44
To determine the number of days in the above calculation we used the actual calendar days in each month as follows:
January 
31 days 
February 
28 days 
March 
31 days 
April 
1 day 
Total 
91 days 
If the trade had been executed on Friday April 1st the calculation would look like this:
(10,000 x 8%) X (93 /365) =
800 X .2547 = $203.83
Interest continues to accrue on weekends even though weekends are not good settlement dates.
January 
30 days 
February 
30 days 
March 
30 days 
April 
3 days 
Total 
93 days 

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Accrued Interest
1. A term used to describe an accrual accounting method when ... 
Accrued Liability
An accounting term for an expense that a business has incurred ... 
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The date at which interest begins to accrue on a fixedincome ... 
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Accrued Benefits
Coverage earned by an employee on a pension plan, based on years ... 
Accrued Revenue
An asset class for goods or services that have been sold or completed ...

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