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To: Oblomov who wrote (62516)	1/29/2001 7:45:29 AM
From: Mama Bear	Respond to of 436258

"the minimum nominal interest paid to holders of TIPS and I-Bonds is 0%. " Maybe on newly issued bonds in the future, but not on current bonds. "3. How is the earnings rate of an I Bond determined? The earnings rate of an I Bond is a combination of two separate rates: a fixed rate of return and a variable semiannual inflation rate. The fixed rate remains the same throughout the life of the I Bond, while the semiannual inflation rate can vary every six months." publicdebt.treas.gov If you buy an I-bond today the fixed return is 3.4%. If we enter a deflationary environment, 3.4% might look really good. publicdebt.treas.gov The interest rate on TIPS is set at auction, and also remains constant through the life of the bond. The principal amount of the security is adjusted for inflation, but the inflation-adjusted principal is not paid until maturity. Interest payments are paid on the adjusted face value of the bond. publicdebt.treas.gov Regards, Barb