Definition of 'Accreted Value'
Zero Coupon Bonds are issued at a discount and mature and are redeemed at par value, say $1,000. The value of the bond increases in a linear mathematically fashion by a slight amount every day during the life of the bond. The mathematical value of the bond on a given day is its accreted value (or accumulated value to date). Note that the accreted value may be higher or lower than the market value of the bond because the accreted value is the linear extrapolation of the issue price to the redeemable price.
Let's take a simple example. You buy a Zero Coupon Bond at $90 which redeems at $100 in 1,000 days time. Over those 1,000 days the bonds value will accrete by 1c per day. So after 500 days the bond's accreted value will be $95. However, the market value, at which you can buy and sell that bond may be higher or lower than the accreted value. This is due to the supply and demand of this bond which is influence by factors such as the credit worthiness of the issuer, which can change during the life of the bond.
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