leeney4578 leeney4578

23-12-2022
Business

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Consider a newly issued TIPS bond with a 3-year maturity, par value of $1,000, and coupon rate of 5%. Assume annual coupon payments.Inflation in Coupon + Principal = TotalTime year just ended Par value payment repayment payment0 $1000.001 3% $1030.00 $51.50 0 $51.502 2% $1050.60 $52.53 0 $52.533 4% $1092.62 $54.63 $1092.62 $1.147.25What are the nominal rate of return and real return on the TIPS bond in the first year?5.00% and 5.00%5.15% and 3.00%8.15% and 5.00%9.10% and 2.10%

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