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The following table showing the cash flows for TIPS bonds. Inflation in Year Just Ended Time Coupon Payment Principal Repayment Total Payment $ Par Value
The following table showing the cash flows for TIPS bonds. Inflation in Year Just Ended Time Coupon Payment Principal Repayment Total Payment $ Par Value $1,000.00 1,030.00 1,071.20 1,085.13 1 2 3 0 3.00% 4.00 1.30 $61.80 64.27 65.11 $ 61.80 64.27 1,150.23 1,085.13 a. What is the nominal rate of return on the bond in year 2? If real rate of return is 6.00% per annum (Round your answer to 2 decimal places.) Nominal rate of return in year 2 % b. What is the real rate of return in year 22 (Round your answer to 2 decimal places.) Real rate of return in year 2 % c. What is the nominal rate of return on the bond in year 3? (Round your answer to 2 decimal places.) Nominal rate of return in year 3 % d. What is the real rate of return in year 3? (Round your answer to 2 decimal places.) Real rate of return in year 3 %
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