Flat trades

Flat trades

A bond in default trades flat; that is, the price quoted covers both principal and unpaid accrued interest. Any security that trades without accrued interest or at a price that includes accrued interest is said to trade flat.

Flat Trades

1. Securities that do not trade with accrued interest included in the price. For example, most American exchanges trade bonds without including interest. See also: Clean price.

2. Securities, especially bonds, that normally trade with accrued interest but are not because of a significant problem. Normally, a bond flat trades when it is in default.