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Suppose that the coupon rate for a TIPS is 2 % . The CPI at issue date is 1 2 0 . Suppose further that
Suppose that the coupon rate for a TIPS is The CPI at issue date is Suppose further that an investor purchases $ of par value of this issue at issue date. TIPS pay semiannual coupons.
a At the end of the first six months, the CPI becomes What is the amount of coupon interest in dollars that will be paid to this investor at the end of the first six months? points
b At the maturity, the CPI drops to what would be the final payment including the last coupon payment and the principal paid to the bondholder?
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