Refer to the table below and calculate both the real and nominal rates of return on the TIPS bond in the second and third years. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Principal and Interest Payments for a Treasury Inflation Protected Security Time Inflation in Year Just Ended Nominal return Real retum Coupon Payment Par Value $1,000.00 1,030.00 $61.80 1,040.30 1,050.70 Second Year 62.42 63.04 % ** % Principal Repayment $1,050.70 Third Year 0 0 % % Total Payment $ 61.80 62.42 1,113.75
Refer to the table below and calculate both the real and nominal rates of return on the TIPS bond in the second and third years. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Principal and Interest Payments for a Treasury Inflation Protected Security Time Inflation in Year Just Ended Nominal return Real retum Coupon Payment Par Value $1,000.00 1,030.00 $61.80 1,040.30 1,050.70 Second Year 62.42 63.04 % ** % Principal Repayment $1,050.70 Third Year 0 0 % % Total Payment $ 61.80 62.42 1,113.75
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Refer to the table below and calculate both the real and nominal rates of return on the TIPS bond in the second and third years. (Do
not round intermediate calculations. Round your answers to 2 decimal places.)
Principal and Interest Payments for a Treasury Inflation Protected
Security
Time
60123
2
3
Inflation in
Year Just
Ended
Nominal return
Real return
38
Coupon
Par Value: Payment
$1,000.00
1,030.00 $61.80
1,040.30
62.42
63.04
1,050.70
Second Year
%
%
Principal
Repayment - Total Payment
$1,050.70
Third Year
0
0
%
$ 61.80
62.42
1,113.75
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