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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INFLATION RISK is the risk that total return on the investment is less than the rate of inflation. It is one of the major risks in fixed income securities. Also called Purchasing Power Risk.

SFAC is Statements of Financial Accounting Concepts.

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