$1.$Suppose the inflation$-$adjusted principal balance of a

TIPS security is $$10,150$ and the original face value is $$10,000.$ If

the coupon rate is $3\%$ and the inflation rate is $2\%($annualized$),$

how much interest will the investor receive at the end of the first

six months?$2.$ In regard to the same TIPS $($with adjusted face value of

$$10,150),$ if inflation remains at the same level, what would

be$$the inflation$-$adjusted principal at the end of the first

year?$$Hint: Compound the inflation adjusted principal from the first

period.$$The coupon rate for a TIPS is $3\%.$ Suppose further that an

investor purchases $$10,000$ of par value $($initial principal$)$ of this

issue today and that the annualized inflation rate is $2\%.$