ACCRUAL BOND Definition

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ACCRUAL BOND is a bond on which interest accrues, but is not paid out to the investor during the time of accrual; instead, the accrual interest is added to the amount of remaining principal and paid at maturity. Also known as an accretion bond or a Z-bond in a CMO issue. See Collateralized Mortgage Obligation.

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YIELD TO MATURITY (YTM) is the rate of return the investor will earn if a bond is held to maturity.

CAR is Certificate of Automobile Receivables; an asset ­backed security supported by automobile loan contracts.

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