Question: TIPS Total Return Reconsider a 2.75 percent TIPS that was issued with CPI reference of 184.2. The bond is purchased at the beginning of the

TIPS Total Return Reconsider a 2.75 percent TIPS that was issued with CPI reference of 184.2. The bond is purchased at the beginning of the year (after the interest payment), when the CPI was 195.4. For the interest in the middle of the year, the CPI was 196.2. Now, at the end of the year, the CPI is 200.5 and the interest payment has been made. What is the total return of the TIPS in percentage terms for the year? Assume semi-annual interest payments and $1,000 par value. (Do not round the intermediate steps. Round your final answer to 1 decimal place.)

2.6 percent
2.8 percent
1.4 percent
5.4 percent

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