What is Accrual Bond?

Legal Definition
An accrual bond is a fixed-interest bond that is issued at its face value and repaid at the end of the maturity period together with the accrued interest. In Germany, the accrued interest is compounded. In contrast to zero-coupon bonds, accrual bonds have a clearly stated coupon rate.
-- Wikipedia
Legal Definition
(1) A TRANCHE of a COLLATERALIZED MORTGAGE OBLIGATION that pays no COUPON interest or PRINCIPAL until all other tranches have been redeemed; this protects investors holding other tranches from PREPAYMENTS. The accrual bond is similar to a zero coupon bond but carries an explicit coupon rate and may ultimately pay both principal and coupons prior to final maturity. (2) A ZERO COUPON BOND. (1) Also known as ZBOND.ACCRUAL NOTE See RANGE FLOATER NOTE.