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A 5 year, 1% coupon (paid annually) TIPS is issued at $1000. The face value of the bond is $1000. Inflation over the next 5
A 5 year, 1% coupon (paid annually) TIPS is issued at $1000. The face value of the bond is $1000. Inflation over the next 5 years is:
1 | 8% |
2 | 6% |
3 | 3% |
4 | 7% |
5 | 10% |
What is your holding period return over the 5 years?
If a Treasury was issued at the same time at par and the real risk free rate of interest at the tme was 1%, what coupon rate would give an investor the same rate of return as the TIPS above?
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