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Suppose that you buy a TIPS ( inflation - indexed ) bond with a 2 - year maturity and a ( real ) coupon of

Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of 5.0% paid annually. If you buy the
bond at its face value of $1,000, and the inflation rate is 9.50% in each year.
a. What will be your cash flow in year 1?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
b. What will be your cash flow in year 2?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
c. What will be your real rate of return over the two-year period?
Note: Enter your answer as a percent rounded to 1 decimal place.
Real rate of return
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