Question: -- Consider a newly issued TIPS bond with a three year maturity, par value of 51000, and a coupon rate of 5%. Assume annual coupon

-- Consider a newly issued TIPS bond with a three year

-- Consider a newly issued TIPS bond with a three year maturity, par value of 51000, and a coupon rate of 5%. Assume annual coupon payments. Time Inflation in year just ended Par Value CPN Payment Principal Payment = Total Payment 0 1000 1 39 1030 51.50 0 51.5 2 10506 52.53 0 52.53 3 49 1092.62 54.63 109262 1147.25 What is the nominal rate of setorn and real cate of return on the TIP bond in the first year! (10 points)

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