Stub period explained

In finance, in particular with reference to bonds and swaps, a stub period is a length of time over which interest accrues are not equal to the usual interval between bond coupons.[1]

These periods normally occur because the interval between coupons does not fit neatly into the period for which the bond was issued, thus sometimes a bond's final or first coupon period may be adjusted to make the bond start and mature on the desired dates.

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Notes and References

  1. Web site: Stub Period.