This is just from a quick search, dualstow.dualstow wrote:Do I? How does that work, like a stock dividend’s date of record or something?
This is from Treasury Direct:
When purchasing a Treasury bond, any interest accrued since the last interest payment is added to the bond purchase price. At the next interest payment date the investor receives the full interest payment.
Use the following formula to figure accrued interest:
A = P x r ( d / t )/2 A = Accrued interest
P = Face value
r = interest rate of Treasury bond
d = # of days since last coupon payment
t = # of days in current coupon period
Example: A 5% 30-year bond ($1,000 principal) is purchased 91 days after the last coupon payment. The current coupon period contains 182 days.
A = 1000 x .05 (91/182)/2 , solving
A = $12.50
So you don't actually see it as an "interest payment" when you sell, meaning that you don't see a price that you sold the bond at plus an accrued interest payment. You just get a higher price for the bond because it is closer to making a payout. Otherwise people would just buy bonds before they pay interest and then dump them again. At least that is my understanding.
Gosh, I sure hope I am correct on this because I recently sold some bonds that pay interest on 5/15.