Title 31

PART 356 APPENDIX B



Appendix B to Part 356 - Formulas and Tables

31:2.1.1.1.53.6.17.1.13 : Appendix B

Appendix B to Part 356 - Formulas and Tables I. Computation of Interest on Treasury Bonds and Notes. II. Formulas for Conversion of Non-indexed Security Yields to Equivalent Prices. III. Formulas for Conversion of Inflation-Protected Security Yields to Equivalent Prices. IV. Formulas for Conversion of Floating Rate Note Discount Margins to Equivalent Prices V. Computation of Adjusted Values and Payment Amounts for Stripped Inflation-Protected Interest Components. VI. Computation of Purchase Price, Discount Rate, and Investment Rate (Coupon-Equivalent Yield) for Treasury Bills.

The examples in this appendix are given for illustrative purposes only and are in no way a prediction of interest rates on any bills, notes, or bonds issued under this part. In some of the following examples, we use intermediate rounding for ease in following the calculations.

I. Computation of Interest on Treasury Bonds and Notes A. Treasury Non-indexed Securities

1. Regular Half-Year Payment Period. We pay interest on marketable Treasury non-indexed securities on a semiannual basis. The regular interest payment period is a full half-year of six calendar months. Examples of half-year periods are: (1) February 15 to August 15, (2) May 31 to November 30, and (3) February 29 to August 31 (in a leap year). Calculation of an interest payment for a non-indexed note with a par amount of $1,000 and an interest rate of 8% is made in this manner: ($1,000 × .08)/2 = $40. Specifically, a semiannual interest payment represents one half of one year's interest, and is computed on this basis regardless of the actual number of days in the half-year.

2. Daily Interest Decimal. We compute a daily interest decimal in cases where an interest payment period for a non-indexed security is shorter or longer than six months or where accrued interest is payable by an investor. We base the daily interest decimal on the actual number of calendar days in the half-year or half-years involved. The number of days in any half-year period is shown in Table 1.

Table 1

Interest period Beginning and ending days are 1st or 15th of the months listed under interest period
(number of days)
Beginning and ending days are the last days of the months listed under interest period
(number of days)
Regular year Leap year Regular year Leap year
January to July 181 182 181 182
February to August 181 182 184 184
March to September 184 184 183 183
April to October 183 183 184 184
May to November 184 184 183 183
June to December 183 183 184 184
July to January 184 184 184 184
August to February 184 184 181 182
September to March 181 182 182 183
October to April 182 183 181 182
November to May 181 182 182 183
December to June 182 183 181 182