You buy a 10-year, $1,000 inflation-indexed Treasury security that pays 3 percent annual interest. Assume inflation is

Question:

You buy a 10-year, $1,000 inflation-indexed Treasury security that pays 3 percent annual interest. Assume inflation is 3 percent for the first five years and 6 percent for the last five years. What will be the value of the bond after 10 years? Disregard the 3 percent annual interest.