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2. If the coupon rate for a TIPS is 3%, an investor purchases $10,000 of par value of this issue today, and the annual inflation
2. If the coupon rate for a TIPS is 3%, an investor purchases $10,000 of par value of this issue today, and the annual inflation rate is 2%, answer the questions below: (a) What dollar coupon cash amount will be paid at the end of the first 6 months? (b) What is the inflation-adjusted principal at the end of one year? (3) (c) What is the coupon cash payment at the end of the first year? (2) (d) Can an investor lose money during deflation if they buy TIPS? (you may Google the answer and then show the link (source) for your answer). @)
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