Calculate the first semi-annual coupon payment

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Consider an investor who purchases a Treasury inflation-indexed note with an original principal amount of $100,000, a 4.250 percent annual coupon rate (coupon is paid semiannually), and 5 years to maturity. The semiannual inflation rate during the 6 months ending 3 months before the first coupon payment (the 3-month lag is necessary to allow for the release of the official CPI figures) is 1.55 percent. Calculate the first semi-annual coupon payment based on the adjusted principal.

Round the answer to two decimal places.

Reference no: EM133060212

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