How treasury issues an inflation-indexed bond


Assignment:

Suppose the Treasury issues two five-year bonds. One is an ordinary bond that offers a fixed nominal coupon rate of four percent. The other bond is an inflation-indexed bond (or TIPS). When the TIPS bond is issued, will it have a coupon rate of four percent, more than four percent, or less than four percent?

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Finance Basics: How treasury issues an inflation-indexed bond
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