Question: Consider a newly issued TIPS bond with a 3-year maturity, par value of $1,000, and coupon rate of 5.30%. Assume annual coupon payments. Inflation in

Consider a newly issued TIPS bond with a 3-year maturity, par value of $1,000, and coupon rate of 5.30%. Assume annual coupon payments. Inflation in year just ended Coupon + Principal - payment repayment Total payment Time 0 1 2 3 3.38 2.38 4.31 Par value $1,000.00 $1,033.00 $1,056.76 $1,102.20 $54.75 $56.01 $58.42 0 $ 54.75 0 $ 56.01 $1,102.20 $1,160.62 What is the nominal rate of return on the TIPS bond in the first year? Multiple Choice 8.78% 9.90%

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