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Q5: An investor purchascs a TIPS note with an original principal amount of $100,000, a 3 pcrcent annual coupon rate (1.5 pcrcent semiannual coupon ratc),
Q5: An investor purchascs a TIPS note with an original principal amount of $100,000, a 3 pcrcent annual coupon rate (1.5 pcrcent semiannual coupon ratc), and 10 ycars to maturity. If the semiannual inflation rate during the 6 months is 1 pcrcent, and if inflation is 1.4 percent over the next 6-month period, what are the adjusted principal amounts and coupon payments for these time periods? A TIPS Note Principal Years to Maturity Coupon Rate Semi-Annual Coupon Ratc CPI 1.00% 1.40% Period Adjusted Principal Coupon
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