meaning of accrual bond

accrual bond meaning in Law Dictionary

(1) A TRANCHE of a COLLATERALIZED MORTGAGE OBLIGATION that will pay no COUPON interest or PRINCIPAL until all the other tranches have-been used; this protects investors holding other tranches from PREPAYMENTS. The accrual bond is similar to a zero voucher bond but carries an explicit coupon price and can even in the end pay both major and coupons before final readiness. (2) A ZERO COUPON BOND. (1) also called ZBOND.ACCRUAL NOTE See RANGE FLOATER NOTE.

accrual bond meaning in Business Dictionary

long-lasting (20 to 25 years) United States business bond that will not pay regular interest but instead accrues it until maturity and, although similar to a zero-coupon bond, features a specified coupon (interest) rate. Also known as accretion bond or z-bond.