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Questions and Answers
What is accrued interest when purchasing a security?
What is accrued interest when purchasing a security?
- Interest accrued from the last due date till the date of purchase (correct)
- Interest accrued from the date of purchase till the last due date
- Interest accrued after the date of purchase
- Interest accrued before the last due date
What is the characteristic of an ex-interest price?
What is the characteristic of an ex-interest price?
- Includes the accrued interest
- Is paid by the purchaser
- Is paid by the seller
- Excludes the accrued interest (correct)
What happens to the accrued interest in a cum-interest price scenario?
What happens to the accrued interest in a cum-interest price scenario?
- It belongs to the seller
- It is deducted from the total payment made by the purchaser
- It is purchased by the purchaser and belongs to him (correct)
- It is paid by the purchaser to the seller
In the context of purchasing securities, what is the total payment made by the purchaser for an ex-interest price?
In the context of purchasing securities, what is the total payment made by the purchaser for an ex-interest price?
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How does pre-acquisition interest impact the cost of investment for a purchaser in a cum-interest price situation?
How does pre-acquisition interest impact the cost of investment for a purchaser in a cum-interest price situation?
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In which scenario does a purchaser retain the accrued interest as part of his investment?
In which scenario does a purchaser retain the accrued interest as part of his investment?
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