Range Accrual

AAA

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.

INVESTOPEDIA EXPLAINS '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. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
  2. Coupon Bond

    A debt obligation with coupons attached that represent semiannual ...
  3. Coupon Pass

    The purchase of treasury notes or bonds from dealers, by the ...
  4. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  5. Accrued Interest

    1. A term used to describe an accrual accounting method when ...
  6. American Option

    An option that can be exercised anytime during its life. American ...
Related Articles
  1. The Advantages Of Bonds
    Investing

    The Advantages Of Bonds

  2. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

  3. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

  4. How To Buy Oil Options
    Options & Futures

    How To Buy Oil Options

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center