A new index-linked gilt is issued on 1.1.2019. The gilt has a coupon rate of 0.25% of nominal paid twice yearly in arrears and the bond will mature in 25 years time at 110% of indexed nominal. There is a no time lag in indexing payments. The bond is indexed by reference to the Retail Prices Index and the relevant values are shown below.

An investor purchases 1000 nominal of the gilt at issue and sells one year later after receiving two coupon payments.

1. (a) Calculate the coupon payments that the investor receives.

Year Jan April July Oct 2018 276.0 279.7 281.7 284.5 2019 283.0 288.2 289.5 290.4 2020 290.6 292.6 294.2 - Year Jan April July Oct 2018 276.0 279.7 281.7 284.5 2019 283.0 288.2 289.5 290.4 2020 290.6 292.6 294.2