As a financial analyst at BAC financial, you are evaluating a TIPS bond with a 3-year maturity, par value of $1,000, and a coupon rate of 6%. The estimated average inflation rate will be 3% over the first year and 4% over the second year.

What is the amount of the coupon payment the bond holder will receive in the first year ? Second year ? What will be the face value of the bond at the end of first year ? The second year ?