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Please provide step by step. Not understanding the solution numbers at the bottom. Refer the table below and calculate both the real and nominal rates
Please provide step by step. Not understanding the solution numbers at the bottom.
Refer the table below and calculate both the real and nominal rates of return on the TIPS bond in the second and third years. Assume the coupon rate is 6%. (Do not round intermediate calculations. Round "Nominal return" to 2 decimal places.) Principal and interest payments for a Treasury Inflation Protected Security Principal- Repayment Total Coupon Time Just Ended Par Value Payment Inflation in Year 2.0% 3.0 1.0 1,000.00 ,020.00 $61.20 1,050.60 1,061.11 Payment $ 61.20 1,124.78 63.04 63.67 63.04 1,061.11 Second Year Third Year 7.06 1%, % Nominal return 9.18 1%1% Real return 6 196 %Step by Step Solution
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