Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of 4.3% paid annually. If you buy the bond at its face value of $1,000, and the inflation rate is 8.45% in each year. a. What will be your cash flow in year 1?

Suppose that you buy a TIPS (inflation-indexed) bond with a 2-yeaf maturity and a (real) coupon of 4.3% poid annually. If you buy the bond at its face value of $1,000, and the inflation rate is 8.45% 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. Answer is complete and correct. b. What will be your cash flow in year 2 ? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Answer is complete and correct. \begin{tabular}{|l|l|} \hline Cash flow $,226.71 \\ \hline \end{tabular} 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