General Securities Sales Supervisor (Series10) Practice Exam

How many days of accrued interest are payable when purchasing a U.S. Government bond on March 18th?

1. 77

2. 78

3. 84

4. 85

The correct answer is: 77

When purchasing a U.S. Government bond, accrued interest is calculated based on the number of days between the last coupon payment date and the settlement date of the bond transaction. For U.S. Government bonds, this period typically spans from the previous interest payment date up to, but not including, the settlement date. In this case, U.S. Government bonds pay interest every six months. Assuming the last interest payment was made on January 1st, the calculation for the number of days of accrued interest from January 1st to March 18th can be performed as follows: From January 1 to March 1, there are 59 days (31 days in January + 28 days in February). From March 1 to March 18, there are an additional 17 days. Adding those together gives a total of 76 days. However, since we need to add one more day to include the settlement date (March 18 itself), the total accrued interest becomes 77 days. Thus, the correct answer is 77 days.