Range Accrual

DEFINITION of 'Range Accrual'

A form of interest accrual in which the coupon rate is only earned on days when another rate from which the coupon is derived falls within a specified range. As such, there is no standard coupon rate that can be counted on for interest payments.

BREAKING DOWN 'Range Accrual'

Range accrual notes are complex instruments that are valued and adjusted in a similar manner to American style options. They are typically used by large institutions as a hedge of another position. No official market exists for range accrual notes trading or valuation.

RELATED TERMS
  1. Current Coupon Bond

    A bond with a coupon rate that is within 0.5\% of the current ...
  2. Accrue

    The ability for something to accumulate over time. In finance, ...
  3. Coupon Rate

    The yield paid by a fixed income security. A fixed income security's ...
  4. Coupon Bond

    A debt obligation with coupons attached that represent semiannual ...
  5. Ex Coupon

    A bond or preferred stock that does not include the interest ...
  6. Short Coupon

    A payment made on a bond within a shorter time interval than ...
Related Articles
  1. Personal Finance

    Coupon Shopping: Clip Your Way To Savings

    Use coupons strategically to score big savings on everyday purchases.
  2. Entrepreneurship & Small Business

    The Pros & Cons Of Using Coupons For Your Business

    Coupons can drive business to your store – you just need to make sure it's profitable business. Here are strategies that work.
  3. Investing

    What is a "Coupon"?

    In the financial world, “coupon” represents the interest rate on a bond.
  4. Investing

    Explaining the Coupon Rate

    Coupon rate is the stated interest rate on a fixed income security.
  5. Markets

    How Does A Bond’s Coupon Interest Rate Affect Its Price?

    All bonds come with a coupon interest rate, which is the fixed annual interest a bond pays.
  6. Markets

    Comparing Yield To Maturity And The Coupon Rate

    Investors base investing decisions and strategies on yield to maturity more so than coupon rates.
  7. Markets

    Using Excel PV Function to compute Bonds PV

    To determine the value of a bond today - for a fixed principal (par value) to be repaid in the future at any predetermined time - we can use an Excel spreadsheet.
  8. Investing

    What does Accrual Mean?

    In accrual-based accounting, transactions are recorded on the books as they occur, even if payment has not yet been received or made. Accruals represent liabilities and non-cash-based assets. ...
  9. Markets

    If I Buy A $1,000 10-Year Bond With A 10% Coupon, Will I Receive $100 Each Year?

    Investors can count on a fixed-income security paying them a certain amount of cash as long as the security is held until maturity and the issuer doesn’t default.
  10. Markets

    What is Reinvestment Risk?

    Reinvestment risk refers to the risk that a bond’s future coupons will have to be reinvested at a lower interest rate.
RELATED FAQS
  1. What is accrual accounting used for in finance?

    Read about the accrual method of accounting, its uses and rules, and why it is considered so important for investors, lenders ... Read Answer >>
  2. When are expenses and revenues counted in accrual accounting?

    Take an in-depth look at the treatment of revenues and expenses within the accrual method of accounting and learn why many ... Read Answer >>
  3. Why does GAAP require accrual basis rather than cash accounting?

    Discover why GAAP requires the accrual basis for accounting rather than the cash basis, and learn why it is important for ... Read Answer >>
  4. How can I set up an accrual accounting system for a small business?

    Read about some of the steps a small business should follow when establishing an accrual accounting system to track revenues ... Read Answer >>
  5. When are businesses required to use accrual accounting?

    Determine when the accrual accounting method must be used instead of cash accounting. Most businesses use accrual accounting ... Read Answer >>
  6. When is revenue recognized under accrual accounting?

    Discover how to report revenue under the accrual method of accounting and why a firm recognizes revenue even when cash has ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center