Glossary of Municipal Securities Terms


The nominal value, at any given point in time, of a security such as a capital appreciation bondzero coupon bond or some deeply-discounted original issue discount bond on which all or a portion of the investment return is received in the form of an accretion from an initial principal amount to a maturity or redemption value. The compound accreted value as of a given time is equal to the initial principal amount plus the accretion (calculated on the compound interest method) to that date. A security’s compound accreted value may differ from its market value depending on current interest rates. A schedule of compound accreted values for a security often is made available to investors, such as in the official statement. See: ACCRETION OF DISCOUNT.

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