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What is the actual interest that will be earned on this TIPS based on the real interest rate and anticipated annual inflation rate assumptions in
What is the actual interest that will be earned on this TIPS based on the real interest rate and anticipated annual inflation rate assumptions in cells B4 and B5 per year (show a table) and over the life of the 10-Year TIPS?
ANALYZING A 10-YEAR TREASURY INFLATION PROTECTED SECURITY (TIPS) 3 Initial investment 1,000.00 4.00% 4 TIPS real interest rate 5 Anticipated annual inflation rate 3.00% 7 TIPS repayment in 10 years 1,989.32 -$B$3 (1+$B$5)A 10 (1+B4) 10 9 Further analysis 34.39% (1+B5)A10-1 10 Anticipated cumulative inflation rate over 10 years 11 TIPS repayment of inflation-adjusted investment 1,343.92 B3 (1+B10) 12 TIPS interest on inflation-adjusted investment 645.41 B, 11*((1+B4)A10-1 13 Total TIPS repayment in 10 years 1,989.32 -B12+B11 14 TIPS interest on inflation-adjusted investment 15 (this is the real interest rate paid by the TIPS) 48.02% B12/B11 Annualized TIPS interest on inflation adjusted 16 nvestment 4.00% (1 +B15) (1/10)-1 17 18 Anticipated nominal return on TIPS 7.12% B7/B3)A (1/10)-1 Another way of computing the nominal return 19 (1+TIPS real rate) (1+inflation rate 7.12% (1 +B$4)*(1+B5)-1 20 oil price data Page 169 Page 170 P170 v2 Page 171 Page 172 Page 173 P173 v2 PagStep by Step Solution
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