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Current as of October 02, 2022 | Updated by FindLaw Staff
We base all calculations of interest on a $25 unit. We use the value of this unit to determine the value of bonds in higher denominations. The effect of rounding off the value of the $25 unit increases at higher denominations. This can work to your slight advantage or disadvantage, depending on whether we round the value up or down. 3
3For example: A composite rate of 2.57% will result in a newly purchased $25 unit increasing in value after six months to $25.32, when rounded to the nearest cent. Thus, a $5,000 bond purchased at the same time as the $25 unit will be worth $5,064 after six months ( [$5,000 divided by $25] x $25.32 = $5,064.) In contrast, if it applied directly to a $5,000 bond, the rate would render a value of $5,064.25 after six months, a difference of 25 cents. (This example does not include any discussion of the three-month interest penalty that applies if you redeem a bond less than five years after its issue date.)
Cite this article: FindLaw.com - Code of Federal Regulations Title 31. Money and Finance–Treasury § 31.359.19 How is interest calculated? - last updated October 02, 2022 | https://codes.findlaw.com/cfr/title-31-money-and-finance-treasury/cfr-sect-31-359-19/
FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs.
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