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Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon of 4.7% paid annually. Assume you buy the bond at

Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon of 4.7% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 9.05% in each year.

a. What will be your cash flow in year 1?

b. What will be your cash flow in year 2?

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