15 [Problem Set 2_CH12: Innovative Government Bonds] Consider the following information of a Treasury Inflation-Protected Security (TIPS). Par value=$1,000, Maturity=5 years, Annual coupon rate =5% Coupon payment occurs once every year The inflation rate for every year = 3% 2.1 How much an investor should receive for the 2nd coupon payment? (4) (A) $50 (B) $51.5 (C) $53.045 O (D) $113.945 16 2.2 Compared to the traditional Treasury securities, why investors may prefer purchasing Treasury Inflation-Protected Security (TIPS)? (4) (A) It protects investors from price risk (B) It protects investors from the inflation risk (C) Both (A) and (B) O (D) None of the above