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The annual coupon rate for a TIPS is 6%. Suppose that an investor purchases $1,000 of par value (initial principal) of this issue today and

The annual coupon rate for a TIPS is 6%. Suppose that an investor purchases $1,000 of par value (initial principal) of this issue today and that the annual inflation rate is 3%.

An investor buys a five-year TIPS and there is deflation for the entire five-year holding

period. What is the principal that will be paid by the Department of the Treasury at the maturity date?

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