Question: e use this same bond: A TIPS bond has a coupon rate of 4%, with semi-annual coupon payments and 1.5 years to maturity for an

e use this same bond: A TIPS bond has a coupon rate of 4%, with semi-annual coupon payments and 1.5 years to maturity for an initial principal of $1,000. Assume the semi-annual inflation rates are 2%, 1%, 3% and for the 3 semi-annual periods (these rates are already 6 month rates). Noticed, all the CF are at the end of the semi- annual. 1.Calculate the bonds cashflow at time t=1.5, round to nearest cents 2.Assume the bond BEY is 4.5%. Joe5,000 bonds so how much will he have to pay, round to nearest cents? 3Assume the require returns are 1%, 2% & 3% in the respective 1st, 2nd and 3rd semi annuals

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