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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 2.50 % 1,025.00 $ 51.25 $ 0 $ 51.25 2 3.00 1,055.75 52.79 0 52.79 3 1.50 1,071.59 53.58 1,071.59 1,125.17
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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