Sec. 344.6

(b) Interest rate.

(1) Each security shall bear a variable rate of interest based on an adjustment of the average yield for three-month Treasury bills at the most recent auction. A new rate is effective on the first business day following the regular auction of three-month Treasury bills and is shown in the SLGS rate table, available to the public on such business day. Interest is accrued and added to principal daily. Interest is computed on the balance of the principal, plus interest accrued through the preceding day.

(2)

(i) The annualized effective demand deposit rate in decimals, designated ``I'' in Equation 1 is calculated as:

[See Mun-Ease documentation]

where P=Average auction price for the most recently auctioned 13-week Treasury bill, per hundred, to three decimals.Y=365 if the year following issue date does not contain a leap year day and 366 if it does contain a leap year day. DTM=The number of days from date of issue to maturity for the most recently auctioned 13-week Treasury bill. MTR=Estimated marginal tax rate, in decimals, of purchasers of tax-exempt bonds. TAC=Treasury administrative costs, in decimals.

(ii) The daily factor for the demand deposit rate is then calculated as follows:

[See Mun-Ease documentation]

(3) Information on the estimated average marginal tax rate and costs for administering the demand deposit State and Local Government Series securities program, both to be determined by Treasury from time to time, will be published in the Federal Register.