The gradual increase in value of a financial instrument over time, particularly bonds purchased at a discount that appreciate toward face value as they approach maturity. Also refers to the gradual accumulation of assets or value through natural growth.
From Latin 'accretio' (increase, growth) from 'accrescere' (to grow toward). In finance, this term was adopted from geology and biology in the mid-20th century to describe the natural appreciation of discounted securities toward their maturity values.
Accretion is like watching a discounted bond slowly 'grow up' to its full adult value - buy a $1000 bond for $800 today, and each year it accretes (grows) closer to that $1000 face value. It's automatic appreciation built into the security's structure, not dependent on market conditions!
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