Question: A $1,000 TIPS (Treasury Inflation-Protected Security) is currently selling for $940 and carries a coupon interest rate of 4 percent. a. If you buy this

A $1,000 TIPS (Treasury Inflation-Protected Security) is currently selling for $940 and carries a interest rate of 4 percent.
a. If you buy this bond, how much will you receive for your first interest payment, assuming no interest adjustment to principal during this time period?
b. If there's a 1 percent increase in inflation, what will be the new of the bond?
c. What is your new semiannual interest payment?
d. What would the be at assuming a 2.5 percent annual inflation rate and a 10-year period?

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