On January 1st of the year an investor purchases
On January 1st of the year, an investor purchases $100,000 in par value of a new Treasury Inflation Protection Security (TIPS) issue that has a 3% coupon rate. The annual rate of inflation over the first six months of the year is 3.5% and the annual rate of inflation for the second six months of the year is 4.0%. The amount of coupon interest paid to the investor after the second six months of the year isclosest to:
A. 1,557.
B. 1,577.
C. 1,597.
参考解答
4j8***102
2024-11-14 19:04:44
Ans:A;
The inflation-adjusted principal after the six month period is
$100,000x1.0175x1.02 = $103,785
And $103,785x(3%/2) = $1557
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