19. A) B) C)

TABLE 10.1 Principal and interest payments for a Treasury inflation Protected Security Inflation in Year Just Ended Time 0 1 2 3 2% 3 Par Value Coupon Payment + Principal Repayment $1,000.00 1.020.00 1,050,60 1,061.11 $40.80 42.02 42.44 $1,061.11 Total Payment 40.80 42.02 1,103.55 lower in this case? (LO 10-2) 19. Return to Table 10.1, showing the cash flows for TIPS bonds. (LO 10-6) a. What is the nominal rate of return on the bond in year 2? 20 b. What is the real rate of return in year 2? c. What is the nominal rate of return on the bond in year 3? d. What is the real rate of return in year 3