Accrual

The term accrual as it is used in finance denotes the accumulation of interest, yields or other returns on investments over time.

When returns such as interest on bank account balances and yields on bonds are reinvested rather than withdrawn, these returns accrue or build up until they are withdrawn.

Accrued interest is interest which is reinvested into an account balance or loan in order to earn additional interest using the compounding interest effect.

Accrual bonds do not pay out yields as regular coupons but add them to the bond principal, with interest being paid on the full amount.

In forex trading, the term accrual refers specifically to the staggered distribution of discounts and premiums for forward transactions related directly to swaps.

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