1)

Consider a T-bond with 25 years to maturity, 10% coupon, and $100M par value. What is the par value of a coupon STRIP in $ million?

2)

Suppose that the coupon rate for a TIPS is 4.2%. Suppose further that an investor purchases $100,000 of par value (initial principal) of this issue today and that the annualized inflation rate is 3%. If the annualized inflation rate over the following 6 months is -0.5%.

What is the coupon payment (in $) at the end of the year?