31 C.F.R. Appendix A to Part 344—Early Redemption Market Charge Formulas and Examples for Subscriptions From December 28, 1976, Through October 27, 1996
Title 31 - Money and Finance: Treasury
(a) The amount of the market charge for bonds and notes subscribed for before October 28, 1996 can be determined by the following formula: (b) The application of this formula can be illustrated by the following example: (1) Assume that a $600,000 note is issued on July 1, 1985, to mature on July 1, 1995. Interest is payable at a rate of 8% on January 1 and July 1. (2) Assume that the note is redeemed on February 1, 1989, and that the current borrowing rate for Treasury at that time for the remaining period of 6 years and 150 days is 11%. (3) The increased annual borrowing cost is $18,000. ($600,000)x(11%-8%) (4) The market charge is computed as follows: (c) The amount of the market charge for certificates of indebtedness subscribed for before October 28, 1996 can be determined by the following formula: (d) The application of this formula can be illustrated by the following example: (1) Assume that a $50,000 certificate of indebtedness is issued on March 1, 1987, to mature on November 1, 1987. Interest is payable at a rate of 10%. (2) Assume that the certificate of indebtedness is redeemed on July 1, 1987, and that the current borrowing cost to Treasury for the 123-day period from July 1, 1987, to November 1, 1987, is 11.8%. (3) The increased annual borrowing cost is $900. ($50,000)×(11.8%−10%) (4) The market charge is computed as follows:
Title 31: Money and Finance: Treasury
PART 344—U.S. TREASURY SECURITIES—STATE AND LOCAL GOVERNMENT SERIES
Subpart D—Special Zero Interest Securities
Appendix A to Part 344—Early Redemption Market Charge Formulas and Examples for Subscriptions From December 28, 1976, Through October 27, 1996