Finance

posted by .

A four-year TIPS bond promises a real annual coupon return of 4 percent and
its face value is $1,000. While the annual inflation rate was approximately
zero when the bond was first issued, the inflation rate suddenly accelerated to
3 percent and is expected to remain at that level for the bond’s four-year term.
What will be the amount of interest paid in nominal dollars each year of the
bond’s life? What will be the face (nominal) value of the bond at the end of each
year of its life?

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. finance

    A treasury note with a maturity of four years carries a nominal rate of interest of 10%. In contrast, an eight year treasury bond has a yeild of 8%. A. If inflation is expected to average 7% over the first four years,what is the expected …
  2. finance

    12. A Treasury note with a maturity of four years carries a nominal rate of interest of 10 percent. In contrast, an eight-year Treasury bond has a yield of 8 percent. a. If inflation is expected to average 7 percent over the first …
  3. finance

    12. A Treasury note with a maturity of four years carries a nominal rate of interest of 10 percent. In contrast, an eight-year Treasury bond has a yield of 8 percent. a. If inflation is expected to average 7 percent over the first …
  4. Finance

    A Treasury note with a maturity of four years carries a nominal rate of interest of 10 percent. In contrast, an eight-year Treasury bond has a yield of 8 percent. a. If inflation is expected to average 7 percent over the first four …
  5. Finance

    A Treasury note with a maturity of four years carries a nominal rate of interest of 10 percent. In contrast, an eight-year Treasury bond has a yield of 8 percent. A. If inflation is expected to average 7 percent over the first four …
  6. Finance

    4.A thirty year US treasury bond has a 4.0 percent interest rate.In contrast, a ten year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. …
  7. Finance

    A thirty-year Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. …
  8. Principles of Finance

    .A thirty year US treasury bond has a 4.0 percent interest rate.In contrast, a ten year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. …
  9. Finance

    You are considering the purchase of an outstanding Nickel Corp bond that was issued at par on Oct. 2, 2007 with a 10-year maturity. It is now Oct 2, 2013. The bond has an 8% coupon rate and has semi-annual coupons. The price is now …
  10. finance

    10 year bond of par value Rs.8,000 was issued, with annual coupon rate of 11.5% and required rate of return is 9% per annum. what is the value of bond?

More Similar Questions