If a Treasury bond pays interest on April 15 and October 15, how many days of accrued interest does a buyer owe if a trade occurs on January 8?

When determining the number of days of accrued interest owed by a buyer for a Treasury bond, it’s important to calculate the time from the last coupon payment to the trade date. In this scenario, the bond pays interest on April 15 and October 15; therefore, the last interest payment prior to the trade on January 8 was on October 15 of the previous year.

To find the total number of days of accrued interest owed, we count the days from October 15 to January 8:

1. October 15 to October 31: There are 16 days (from the 15th to the 31st).

2. November: November has 30 days.

3. December: December has 31 days.

4. January 1 to January 8: This adds another 8 days.

Now, we total these days:

• 16 days (October)

• 30 days (November)

• 31 days (December)

• 8 days (January)

Adding these together gives us:

16 + 30 + 31 + 8 = 85 days

However, since interest on Treasury bonds is typically calculated using a 30/360 method for simplicity in some