Question: I need someone show me how solve these problems. a Understanding TIPS and inflation If an investor purchases a over the first year and 4.7%


a Understanding TIPS and inflation If an investor purchases a over the first year and 4.7% two-year TIPS and the CPI increases 2.0% 3.1% over the second year, how much does the investor receive at maturity? 1,000 CPI Nominal Real 4.7% Year Inflation Cash Flow Cash Flow Face value= Stated coupon rate= 1 2 b Understanding the market price of bonds How muchs should you pay for a bond with a 2.7% coupon with annual coupon payments if the term to maturity is 4 years and the current market rate of interest is 3.2% for a comparably risky asset? $1,000 2.7% Par value= Coupon rate= Coupons Market rate of interest= Term to maturity= 3.2% 4 Current market price a Understanding TIPS and inflation If an investor purchases a over the first year and 4.7% two-year TIPS and the CPI increases 2.0% 3.1% over the second year, how much does the investor receive at maturity? 1,000 CPI Nominal Real 4.7% Year Inflation Cash Flow Cash Flow Face value= Stated coupon rate= 1 2 b Understanding the market price of bonds How muchs should you pay for a bond with a 2.7% coupon with annual coupon payments if the term to maturity is 4 years and the current market rate of interest is 3.2% for a comparably risky asset? $1,000 2.7% Par value= Coupon rate= Coupons Market rate of interest= Term to maturity= 3.2% 4 Current market price
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