An accrual bond is a type of fixed-income security that differs from traditional bonds in terms of interest payment timing. Unlike most bonds, which pay periodic interest (typically semi-annually or annually), accrual bonds do not make regular interest payments during their tenure. Instead, they are issued at a discount to their face value and accumulate interest over time, reflecting an implicit interest rate.

Accrual bonds are also known as zero-coupon bonds with imputed interest, as the interest is not paid out as cash but rather accrues and becomes payable upon maturity. This means that investors do not receive periodic income, but they benefit from the gradual appreciation of the bond's value as it approaches maturity.

The appeal of accrual bonds lies in their long-term investment potential, as they often offer higher returns than traditional bonds due to their discounted issuance price. However, investors should be aware of the tax implications associated with accruing interest, as it may be subject to taxation even though it has not been received in cash.

An accrual bond, also known as a zero-coupon bond, is a type of bond that does not pay periodic interest (coupons). Instead, it is sold at a discount to its face value and accrues interest over its life. The bondholder receives a lump sum payment, which includes the principal and accumulated interest, when the bond matures.

Accrual bonds are attractive to investors who do not need regular income but seek a lump sum return. The interest earned is compounded, meaning it grows exponentially over time. These bonds are often used for long-term investment goals, such as saving for retirement or education. Because they don't provide interim interest payments, accrual bonds can offer higher yields compared to regular coupon bonds.