PLEASE SHOW WORK

A 4-year TIPS is issued at par, promising to pay a real annual coupon interest rate of 4%. Expected inflation rates are as follows: Year 1 = 2%, Year 2 = 2.5%, Year 3 = 2.8%, Year 4 = 2%. Calculate the nominal coupon rates for only Year 1 and Year 2.

	$40; $40.80
	$40.80; $41.82
	$41.82; 42.99
The rate that determines your periodic interest payment on a bond is called: Yield to maturity Current yield Add-on interest rate Discount interest rate None of the above

FOR THIS AND NEXT QUESTION. A bond has the following trading data: Coupon rate = 7 1/4%; Current price = 107.78125% of par; Maturity = 2 years. Bonds such this pay interest semiannually. Calculate the yield-to-maturity (YTM) on this bond

		Less than 4%
		Exactly 4.45%
		Greater than 7%
		Exactly 5.25%
		None of the above

DURATION. Calculate the duration of this bond. Be sure to store your intermediate data as you calculate your final answer.

		1.934 years
		1.907 years
		1.852 years