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Treasury securities are issued and backed by the U . S . government and, therefore, are considered to be the lowest - risk securities on
Treasury securities are issued and backed by the US government and, therefore, are considered to be the lowestrisk securities on the market. As an investor looking for protection against inflation, you are considering the purchase of inflationadjusted bonds known as US Treasury InflationProtected Securities TIPS With these securities the face value which is paid at maturity and the bond interest rate which is paid semiannually is regularly adjusted to account for inflation. However, for this problem only, assume the semiannual interest payment called the bond dividend remains the same.
You purchased a year $ TIPS bond with dividend of per year payable semiannually ie $ every months Assume there is no inflation adjustment for the first years, but in years through the bond face value increases by $ each year. You use an expected investment return of per year compounded semiannually.
NOTE: This is a multipart question. Once an answer is submitted, you will be unable to return to this part.
What will be the equivalent future worth of the total money received with dividend reinvestment included?
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