You have invested in a Treasury Inflation Protected Security (TIPS) that has a par value of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You have invested in a Treasury Inflation Protected Security (TIPS) that has a par value of $1,000 and a coupon rate of 3.07%. You paid par value for the security, and it matures in two years. Assume that the inflation rate for next year is 3.45% and for the year after is 2.03%. Required: Complete the following table by calculating the par values, the coupon payments, the principal repayment, the total payments, and the nominal and real rates of return for the next two years. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Time 0 1 2 Inflation in Year Just Ended Par Value S 1,000.00 3.45% S 1,000.00 $ 2.03% $ 1,000.00 $ Coupon Payment 30.70 $ 30.70 $ Principal Repayment 1,055.50 $ 1,055.50 $ Total Payment 1,086.20 1,116.90 Nominal Return 3.07 % 8.62 % Real Return 2.97 % 5.00 % You have invested in a Treasury Inflation Protected Security (TIPS) that has a par value of $1,000 and a coupon rate of 3.07%. You paid par value for the security, and it matures in two years. Assume that the inflation rate for next year is 3.45% and for the year after is 2.03%. Required: Complete the following table by calculating the par values, the coupon payments, the principal repayment, the total payments, and the nominal and real rates of return for the next two years. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Time 0 1 2 Inflation in Year Just Ended Par Value S 1,000.00 3.45% S 1,000.00 $ 2.03% $ 1,000.00 $ Coupon Payment 30.70 $ 30.70 $ Principal Repayment 1,055.50 $ 1,055.50 $ Total Payment 1,086.20 1,116.90 Nominal Return 3.07 % 8.62 % Real Return 2.97 % 5.00 %
Expert Answer:
Answer rating: 100% (QA)
A 1 B C D E F G H I J K L M 2 Time Inflation in Year Just Ended Par Value Coupon Payment ... View the full answer
Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
Posted Date:
Students also viewed these finance questions
-
Each hour from 10 A.M. to 7 P.M., a bank receives checks and must process them. Its goal is to process all checks the same day they are received. The bank has 13 check processing machines, each of...
-
(a) The allowance method of accounting for bad debts requires an estimate of bad debt expense at the end of each accounting period. The two common methods to determine the estimate amount are the...
-
On your first day at work as an electrical technician, you are asked to determine the resistance per meter of a long piece of wire. The company you work for is poorly equipped. You find a battery, a...
-
The name of each data Table in an Oracle Server database must be prefixed by the keyword or (True/False)
-
Obtain the response of the model 9+ 3v = f(t), where f(t) = 7t and v(0) = 0. Is steady-state response parallel to f(t)?
-
Draw the shear and moment diagrams for the beam. [ABET: 1.3- 6 Marks] Indicate values at the supports and at the points where a change in load occurs. [ABET: 1.2- 2 Marks] 4 kN/m -B 1.5 m -2 m- 1.5 m
-
Why is an ethical culture considered necessary for fraud prevention and deterrence?
-
Myers Company provides you with the following condensed balance sheet information. For each transaction below, indicate the dollar impact (if any) on the following five items: (1) total assets, (2)...
-
An imaginary Canadian cell phone company would want to examine to determine if there is potential to sell their products in India and USA? How the marketing will be done internationally?
-
Q1. Use the LIFO cost-flow assumption to answer the following questions. YEAR 1: Purchase #1 1,000 units @ $1 = $1,000 Purchase #2 1,000 units @ $1 = $1,000 a. How much is goods available for sale?...
-
The amino acid which acts as helix breaker (interrupt) is OAlanine OProline OHistidine OTyrosine
-
what is the primary reason that the gross margin of a manufacturer is likely to be greater than the gross margin of a distributor?
-
What defines an oratorio, and what are the distinguishing characteristics that set it apart from opera as a musical form?
-
How would this story be different if it were from Wendy and Peter's perspective instead of George and Lydia?
-
Complete the table given below a. Interest revenue b. Depreciation expense-Equipment c. Loss on sale of equipment d. Accounts payable e. Other operating expenses f. Accumulated depreciation...
-
Outline the features and functions of different plans and applicable key features provided. a. Site plans b. Construction floor plans c. Elevations d. Sectional Elevations e. Bracing plan f. Cross...
-
Describe Activity Based Costing? How does it differ from Volume - Based Costing? How are Activity Based Costing and Activity Based Management related?
-
In a nonmagnetic medium, E = 50 cos (10 9 t 8x) a y + 40 sin (10 9 t 8x) a z V/m find the dielectric constant r and the corresponding H.
-
The file S02_39.xlsx lists the average high school student scores on the SAT exam by state. There are three components of the SAT: critical reading, math, and writing. These components are listed,...
-
Suppose you play a game at a casino where your probability of winning each game is 0.49. On each game, you bet $10, which you either win or lose. Let P(n) be the probability that you are ahead by at...
-
The file S12_68.xlsx contains monthly data on consumer revolving credit (in millions of dollars) through credit unions. a. Use these data to forecast consumer revolving credit through credit unions...
-
When you exhale, all of the air in your lungs must exit through the trachea. If you exhale through your nose, this air subsequently leaves through your nostrils. The area of your nostrils is less...
-
A balloon is at a height of \(5.0 \mathrm{~km}\) and is descending at a constant rate. The buoyancy force is directed ; the drag force is directed A. Up, up B. Up, down C. Down, up D. Down, down...
-
A balloon is launched at sea level, where the air pressure is \(100 \mathrm{kPa}\). The density in the hot-air chamber is \(1.0 \mathrm{~kg} / \mathrm{m}^{3}\). What is the density of the air when...
Study smarter with the SolutionInn App