Ex and cum interest


can anyone expain what is ex-interest and what is cum interest with examples plzzzzzzzzzz



In case an interest bearing financial instrument is sold ex interest, it means that the seller will be entitled to get the interest till the date of sales.  In other case where the instrument has been sold cum interest means that the interest till the date of sales also passed on to the purchaser.  Accordingly, the cum interest selling price is always higher than the ex interest price and the difference is usually is the interest accrued till the date of sale. 

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In an ex-int transaction price does nt include the amt of interest bt in case of cum int price is inclusive of interest. So while doing the solution of an investment sum u shud first deduct the amount of intrest frm the price of cum int transaction and put that interest amt to intrst column. In case of ex int price does nt include the amount of intrst so just put the ex int amount in the cost column and int amt to the intrst column. The only diff between cum and ex is that in one price is inclusive of int and in another exclusive.

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Faculty in a B-School

     These terms are used in connection with fixed interest bearing bonds/debentures.  Every company keeps a register of its debentureholders.  Ownership of the debentures keep on changing due to constant sale and purchase of debentures.  Before paying interest the company opens its register for the new owners of debentures to get themselves registered so that they could receive interest.  Now I will try to explain you the whole process with the help of an example.  For example a company has issued 100000 12% debentures of Rs100 each on which it is going to pay interest on 31/12/2015.  The company announces that those who want to receive interest on debentures may register themselves with the company by 30/10/2015.  

To read more please go to: http://www.jbsclasses.com/q2a_link/index.php?qa=1907&qa_1=what-is-the-meaning-of-ex-interest-and-cum-interest


In simple words,difference between the two is:-

Cum interest price : It means the interest price included in the principal amount

Ex interest price: It means the interest price will not include in principal amount



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