A 5.05% Coupon Treasury Inflation Protection Security has anoriginal reference CPI of 295.32. If the current CPI is 302.33,what is the current coupon interest payment? (Assumesemiannual interest payments and a par value of $1,000)$25.25$23.74$25.85○ $51.70

1. Calculate the adjusted principal: The principal of TIPS adjusts according to changes in the…

Answered: A 5.05% Coupon Treasury Inflation…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 26P

See similar textbooks

Question

A 5.05% Coupon Treasury Inflation Protection Security has an
original reference CPI of 295.32. If the current CPI is 302.33,
what is the current coupon interest payment? (Assume
semiannual interest payments and a par value of $1,000)
$25.25
$23.74
$25.85
○ $51.70

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

which one is correct please confirm? QUESTION 21 If the return on U.S. Treasury bills is 7.02%, the risk premium is 2.32%, and the inflation rate is 4.16%, then the real rate of return is ____. a. 7.02% b. 6.48% c. 4.70% d. 2.86%
The following data are gathered for: · The real risk-free rate is 1.25% · Inflation premium is constant at 2.50% · Default risk premium is 5% · Liquidity risk premium is 0.50% What is the quoted rate on a short-term government security? (Format: X.XX%)
Consider the following money market information being quoted: Which of the following statements is true? Particulars GBP Interest Rate THB Interest Rate Spot Rate 1-year Expected Spot Rate Bid Rate 6.100% 10.550% THB5.6601/GBP THB5.9037/GBP C. Ask Rate 6.125% 10.625% THB5.6622/GBP THB5.9961/GBP a. There is an arbitrage which can only be made by initially borrowing GBP and then investing in THB. b. More than one of the options in this question are correct. The THB is selling at a premium to the GBP in the future. O d. There is an arbitrage which can only be made by initially borrowing THB and then investing in GBP.
Suppose the real rate is 7 percent and the inflation rate is 2.6 percent. What rate would you expect to see on a Treasury bill? Multiple Choice O O 11.25% 10.76% 9.78% 8.80% 8.31%
A 1.85% Coupon Treasury Inflation Protected Security (TIPS) last principal balance is $103,250. The most recent annual inflation rate is 2.25%. What is the semi-annual coupon interest? a. $976.55 b. $1,161.56 c. $938.88 d. $965.81
which one is correct answer please confirm? Q23: The real rate of interest is expected to be 3%, and the expected rate of inflation for next year is expected to be 5.5%. If the default risk premium is 1.1 percentage points, and the seniority risk premium is 0.4 percentage points, what is the required return on a 1-year U.S. Treasury security? a. 9.6% b. 10.0% c. 8.9% d. 8.5%
Only typed answer Suppose that the current 4-year treasury security rate is 5.5 percent and the 1-year treasury rate is 3.75 percent. According to the unbiased expectations theory, what should be the 3-year expected rate 1-year from now? Group of answer choices 6.09% 6.39% 5.88% 4.74%
Real risk-free rate (r") = 3.0% Expected inflation rates: Year 1 = 3.0 % , Year 2-3.5%, Year 3 = 4.0%, Year 4- 4.0%, Year 5 and after = 4.5% - Liquidity premium (LP) - 0.5% IM Maturity risk premium (MRP) = 0.05 x (t-1)% Default risk premium (DRP) = 2.5% What is the corporate bond yield spread? 3.50% O 3.00% 2.45% 5.5%
Suppose the real rate is 8.5 percent and the Inflation rate is 2 percent. What rate would you expect to see on a Treasury bill? Multiple Cholce 9.60% 11.74% 9.07% 12.27% 10.67%
The following data are gathered for:· The real risk-free rate is 1.25%· Inflation premium is constant at 2.50%· Default risk premium is 5%· Liquidity risk premium is 0.50% What is the quoted rate on a short-term government security?
If the expected inflation rate is 3.45%, the realized real rate of return is 3.80%, and the actual inflation rate is 2.15%, what is the required real rate of return? а. 1.45% b. 2.50% С. 5.60% d. 2.35%
vvk.5 The real risk-free rate is 4%. Inflation is expected to be 2% this year, 3% next year, and then 4.5% thereafter. The maturity risk premium is estimated to be 0.0006 \times (t - 1), where t = number of years to maturity. What is the nominal interest rate on a 7-year Treasury security? Do not round intermediate calculations. Round your answer to two decimal places. %

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

SEE MORE TEXTBOOKS

A 5.05% Coupon Treasury Inflation Protection Security has an original reference CPI of 295.32. If the current CPI is 302.33, what is the current coupon interest payment? (Assume semiannual interest payments and a par value of $1,000) $25.25 $23.74 $25.85 ○ $51.70