Question
Consider a newly issued TIPS bond with a 3-year maturity, par value of $1000, and a coupon rate of 7%. Assume annual coupon. Inflation rates
Consider a newly issued TIPS bond with a 3-year maturity, par value of $1000, and a coupon rate of 7%. Assume annual coupon. Inflation rates in the first, second and third year are given as 4%, 1%, 3%. Calculate the real rate of return of TIPS in the second year.
| 13.46% | ||
| 7% | ||
| 11.28% | ||
| 10.5% |
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Financial Accounting A Focus On Interpretation And Analysis
Authors: Richard F Kochanek, A Douglas Hillman
7th Edition
1111061750, 9781111061753
