Question
Consider a newly issued TIPS bond with a three year maturity, par value of $1000, and a coupon rate of 7%. Assume annual coupon payments.
Consider a newly issued TIPS bond with a three year maturity, par value of $1000, and a coupon rate of 7%. Assume annual coupon payments.
| Time | Inflation in year just ended | Par Value | Coupon Payments | Principal Payment | Total Payment |
| 0 |
| $1000.00 |
|
|
|
| 1 | 3.0% |
|
|
|
|
| 2 | 3.5% |
|
|
|
|
| 3 | 4.5% |
|
|
|
|
a) Fill in the shaded cells with amounts in the above table.
b) What is the nominal rate of return on the TIPS bond in the first year?
c) What is the real rate of return on the TIPS bond in the first year?
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Robonomics Prepare Today For The Jobless Economy Of Tomorrow
Authors: John Crews
1st Edition
1530910463, 978-1530910465
