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Weekly National Rates and Rate Caps
Linear interpolation is a way of estimating a value based on at least two other values. For example, a 9 month and 12 month rate can be used to approximate an 11 month rate.
The 12 month CD is 3 months longer than the 9 month CD.
The 12 month CD yields 150 basis points more than the 9 month CD.
On average, the yield of the CD increases 50 basis points for every additional
month of maturity.
Using linear interpolation, we estimate a 10 month CD would yield 2.50% and
an 11 month CD would yield 3.00%.
In this example we would assume the comparable market rate for an 11 month
CD is 3.00%, and the maximum allowable rate for a bank subject to Section
337.6 is 3.75%.
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