Question
Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of 4.8% paid annually. If you buy the bond
Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of 4.8% paid annually. If you buy the bond at its face value of $1,000, and the inflation rate is 9.20% in each year.
What will be your cash flow in year 1?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
What will be your cash flow in year 2?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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.
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The F And I Revolution Finance Reimagined
Authors: Michael A Bennett
1st Edition
1507777221, 978-1507777220
