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Suppose that you buy a TIPS ( inflation - indexed ) bond with a 1 - year maturity and a ( real ) coupon of
Suppose that you buy a TIPS inflationindexed bond with a year maturity and a real coupon of paid annually. If you buy the bond at its face value of $ and the inflation rate is C
A What will be your cash flow at the end of the year?
Note: Do not round intermediate calculations. Round your answer to decimal places.
B What will be your nominal rate of return? Interest rates during the year are unchanged.
C What will be your real rate of return?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to decimal places.
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