A 2-year TIPS that pays 1% annual coupons has $100 face value and -0.5% yield to maturity.

(a) What is the price of the TIPS today?

(b) Suppose the Consumer Price Index (CPI) goes up by 2% for the next year, what are the new face value, coupon payment, and price of the bond one year from now just after the first coupon is paid? Assume that the coupon reflects the adjusted face value and that the yield to maturity remains constant at -0.5%

(c) Based on (b), what are the nominal and real holding period returns for the bond in the next year?