Question $6$

$10$ pts

A TIPS bond has a $5\%$ coupon rate, $1\mathrm{.}5$ years to maturity, pays semiannually, and a YTM of $6\%.$ The CPI is currently at $300$ and is expected to increase to $309\mathrm{.}6$ after $6$ months year; to $325\mathrm{.}08$ after $1$ year; and to $340$ after $1\mathrm{.}5$ years. Calculate the price of this bond.

Question $7$

$10$ pts

A $5-$year Treasury that pays semiannually has a $6\%$ coupon and $6\%$ yield. It is converted into STRIPS. Calculate the price of the STRIPS created from the $$1,000$ face value to be paid in $5$ years.