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Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of 5.8% paid annually. If you ouy the bond
Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of 5.8\% paid annually. If you ouy the bond at its face value of $1,000, and the inflation rate is 10.70% 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. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places. a. What is the bond's yield to maturity if the bond is selling for $1,000 ? b. What is the bond's yield to maturity if the bond is selling for $1,100 ? c. What is the bond's yield to maturity if the bond is selling for $1,300
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