What will be your cash flow at the end of the year

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Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 6% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 8%.

a. What will be your cash flow at the end of the year?

b. What will be your real return?

c. What will be your nominal return?

Please provide explanations

Reference no: EM132395535

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