Assume a hypothetical country, Lemuria, where the national government has issued 20-year capital-indexed bonds linked to the domestic Consumer Price Index (CPI). Lemuria’s economy has been free of inflation until the most recent six months, when the CPI increased. Following the increase in inflation:

A. The principal amount remains unchanged but the coupon rate increases.

B. The coupon rate remains unchanged, but the principal amount increases.

C. The coupon payment remains unchanged, but the principal amount increases.