Question: Consider a newly issued TIPS bond with a 7-year maturity, par value of $1,000, and coupon rate of 3.47% with annual payments. If the inflation

Consider a newly issued TIPS bond with a 7-year maturity, par value of $1,000, and coupon rate of 3.47% with annual payments. If the inflation rate in the first year is 3.85%, what is the nominal rate of return on this bond in the first year?

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