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31 C.F.R. § 359.14   How are composite rates determined?

Title 31 - Money and Finance: Treasury

Title 31: Money and Finance: Treasury
PART 359—OFFERING OF UNITED STATES SAVINGS BONDS, SERIES I
Subpart A—General Information

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§ 359.14   How are composite rates determined?

Composite rates are set according to the following formula (See Appendix A to part 359 for examples of calculations involving composite interest rates.):

Composite rate = {(Fixed rate ÷ 2) + Semiannual inflation rate + [Semiannual inflation rate × (Fixed rate ÷ 2)]} × 2.²

² Example for I bonds issued May 2002–October 2002:

Fixed rate = 2.00%

Inflation rate = 0.28%

Composite rate = [0.0200 ÷ 2 + 0.0028 + (0.0028 × 0.0200 ÷ 2)] ×2

Composite rate = [0.0100 + 0.0028 + 0.000028] ×2

Composite rate = 0.012828 × 2

Composite rate = 0.025656

Composite rate = 0.0257 (rounded)

Composite rate = 2.57% (rounded)

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