Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon...
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Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon of 4.7% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 9.05% in each year.
Suppose that you buy a TIPS (Inflation-Indexed) bond with a 2-year maturity and a coupon of 4.7% pald annually. Assume you buy the bond at its face value of $1,000, and the Inflation rate is 9.05% in each year. a. What will be your cash flow in year 1? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Cash flow b. What will be your cash flow in year 2? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Cash flow c. What will be your real rate of return over the two-year period? (Round your answer to 1 decimal place.) Real rate of return %
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