A$.$ Show year by year calculations for a $1\mathrm{.}5\%$ Inflation Protection Bond with $$1000$ Par Value and $5$ years remaining to maturity for a newly issued bond at a price of $$900,$ given the following inflation rates.

B$.$ Explain important results that you observe from your calculations. Why are your findings important to the market?

Show detailed calculations for each column.

Year End Prevailing Inflation $(\%)$ Interest Income Received $($$$)$ Accrued Principal Value of the Bond Income Earned Due to Inflation $($$$)$ Effective Total Return $($$$)$ Rate of Return on Investment $(\%)*$ Effective Real Rate of Return $(\%)$

$13\%$

$24\%$

$31\%$

$40\%$

$5--1\mathrm{.}5\%$