Ask Question
31 May, 00:57

An investor buys a $10,000 par, 4.25 percent annual coupon TIPS security with three years to maturity. If inflation rate is 2.50 percent every six months over the investor's holding period, what is the final payment the TIPS investor will receive? (Hint: the final payment includes the principal and the last coupon payment)

+3
Answers (1)
  1. 31 May, 03:01
    0
    Adjusted face value = 10000 * (1+2.5%) ^ (3*2)

    = 11596.93

    Final payment = Coupon + adjusted principal

    = 11596.93*4.25%/2 + 11596.93

    = $ 11843.36
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “An investor buys a $10,000 par, 4.25 percent annual coupon TIPS security with three years to maturity. If inflation rate is 2.50 percent ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers