The annual coupon rate for a TIPS is 6%. Suppose that an investor purchases $ 1.000 of value (initial principal) of this issue today and that the annual inflation rate is 3%. What is the dollar coupon interest that will be paid in cash at the end of the first six months? What is the inflation-adjusted principal at the end of the year? 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? The chart below plots the yield to maturity for the 10-year nominal Treasury bond (solid line) and 10-year TIPS (dashed line) over the January 2003 to August 2013 period. Explain why the nominal bond always has a higher yield than the TIPS. Does the yield spread between the nominal bond and the TIPS tell us anything about future inflation rates? Discuss. There are two zero-coupon bonds. A and B. Both bonds have a maturity of 1 year. The par value of A i The annual coupon rate for a TIPS is 6%. Suppose that an investor purchases $ 1.000 of value (initial principal) of this issue today and that the annual inflation rate is 3%. What is the dollar coupon interest that will be paid in cash at the end of the first six months? What is the inflation-adjusted principal at the end of the year? 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? The chart below plots the yield to maturity for the 10-year nominal Treasury bond (solid line) and 10-year TIPS (dashed line) over the January 2003 to August 2013 period. Explain why the nominal bond always has a higher yield than the TIPS. Does the yield spread between the nominal bond and the TIPS tell us anything about future inflation rates? Discuss. There are two zero-coupon bonds. A and B. Both bonds have a maturity of 1 year. The par value of A