1 000 tips treasury inflation-protected security is


?$1 000 TIPS? (Treasury Inflation-Protected? Security) is currently selling for ?$917 and carries a coupon interest rate of 4.29 percent.

a. If you buy this? bond, how much will you receive for your first interest? payment, assuming no interest adjustment to principal during this time? period?

b. If? there's a 0.78 percent increase in? inflation, what will be the new par value of the? bond?

c. What is your new semiannual interest? payment?

d. What would the par value be at? maturity, assuming a 3.00 percent annual inflation rate and? ten-year maturity? period?

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Financial Management: 1 000 tips treasury inflation-protected security is
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