§ 359.14. How are composite rates determined?
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/us/cfr/t31/s§ 359.14·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
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)