Question: 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

Consider a newly issued TIPS bond with a 3-year maturity, par

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 year just ended Principal repayment Total payment Time 0 1 3. 20. 4 Coupon Par value payment S1000.00 S1030.00 $51.50 $1050.60 $52.53 S1092.62 $54.63 0 0 $1092.62 $51.30 $52.53 $1.147.25 What is the nominal rate of return on the TIPS bond in the second year? OA.5.15% O B. 7.1% O C.5% OD. 8.15%

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