Accrual notes

These notes accrue interest daily at an enhanced yield, provided that a particular market rate falls within a specified range. For example, when the 1-year yield on vanilla instruments is 4%, a dollar-denominated, 1-year range accrual note might accrue interest at 6% p.a. on every day that 3-month EURIBOR fixes in the range 2.5% to 3.5%, otherwise it accrues nothing that day. 

Range accrual notes can be based on almost any qnoted market rate. In this example, the return on a dollar-denominated instrnment is linked to European short-term interest rates, but it could also be linked to exchange rates, stock or commodity prices. In most cases they are structured using strips of digital options. 

This is another short-term note that pays an enhanced rate provided that another market rate meets certain criteria. However, unlike the accrual note, all the accrued interest will be eliminated if the criteria are not met. 

Note that cash flows corresponding to the accrual of interest are not represented by arrows in Figure 3.4. The interest rate per month is 0.4167, not 5.00 percent (the... 

Table 9.3. Enrollment by institution in the DMIST trial. The far right column list the manufacturer of the digital equipment used at that site. Note that two institutions. Mount Sinai Hospital and Elizabeth Wende Breast Clinic, ran the trial with two different machines, essentially constituting two separate sites each. Two sites switched machines during the course of the accrual phase ( Radiological Society of North America. Reprinted with permission from Pisano et al. 2005b)...

Note also that the accrual method of accounting is being used, not the cash method or basis. With the accrual approach, income is recognized and entered into the books as it is earned (not when the revenue is actually received as when the cash basis is used). Expenses are recognized and entered when they are incurred (not when payments are actually made as when the cash basis is used). The annual income statement for the hypothetical construction company was developed and the explanations that follow are based on, in part, income statements prepared and explained by others (e.g.. Blank and Tarquin 2005 and Clough et al 2005) ... 

Note that the table uses the accrual method of accounting, as described earlier in this chapter. Review of each line item ... 

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