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he following table showing the cash flows for TIPS bonds. Time Inflation in Year Just Ended Par Value Coupon Payment + Principal Repayment = Total

he following table showing the cash flows for TIPS bonds.

Time Inflation in Year Just Ended Par Value Coupon Payment + Principal Repayment = Total Payment
0 $ 1,000.00
1 3.25 % 1,032.50 $ 67.11 $ 0 $ 67.11
2 4.00 1,073.80 69.80 0 69.80
3 1.55 1,090.44 70.88 1,090.44 1,161.32

a. What is the nominal rate of return on the bond in year 2? If real rate of return is 6.50% per annum (Round your answer to 2 decimal places.) b. What is the real rate of return in year 2? (Round your answer to 2 decimal places.) c. What is the nominal rate of return on the bond in year 3? (Round your answer to 2 decimal places.) d. What is the real rate of return in year 3? (Round your answer to 2 decimal places.)

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