Question: Suppose that the coupon rate for a TIPS is 3%. Suppose further that an investor purchases $10,000 of par value (initial principal) of this issue

Suppose that the coupon rate for a TIPS is 3%. Suppose

Suppose that the coupon rate for a TIPS is 3%. Suppose further that an investor purchases $10,000 of par value (initial principal) of this issue today and that the semiannual inflation rate is 1%. Answer the following questions: (a) What is the dollar coupon that will be paid in cash at the end of the first six months? (b) What is the inflation-adjusted principal at the end of six months

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