SIE practice questionmediumAccrued Interest
When a T-note is traded between coupon dates, how is accrued interest calculated?
- AInterest is only due at maturity
- B30/360 day-count basis
- CNo accrued interest is paid
- DActual/actual day-count basis✓ Correct answer
Explanation
Why D — Actual/actual day-count basis
Treasury securities use actual/actual day-count, differing from corporate and muni bonds (30/360). Accrued interest is paid at settlement, not just at maturity.
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