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The following table showing the cash flows for TIPS bonds. Time Inflation in Year Just Ended Par Value Coupon Payment + Principal Repayment = Total

The following table showing the cash flows for TIPS bonds.

Time Inflation in Year Just Ended Par Value Coupon Payment + Principal Repayment = Total Payment
0 $ 1,000.00
1 4.00 % 1,040.00 $ 83.20 $ 0 $ 83.20
2 3.00 1,071.20 85.70 0 85.70
3 3.00 1,103.34 88.27 1,103.34 1,191.60

a. What is the nominal rate of return on the bond in year 2? If real rate of return is 8.00% per annum (Round your answer to 2 decimal places.)

b. What is the real rate of return in year 2? (Round your answer to 2 decimal places.)

c. What is the nominal rate of return on the bond in year 3? (Round your answer to 2 decimal places.)

d. What is the real rate of return in year 3? (Round your answer to 2 decimal places.)

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