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Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 5% paid annually. Assume you buy the bond at
Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 5% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 9%.
Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 5% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 9%. a. What will be your cash flow at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Cash flow b. What will be your real return? Real return c. What will be your nominal return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return
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