Can you show me how you derived at your answer? Thank you.
A TIPS bond is issued in the principal amount of $1,000, paying 3.5%. Over the security's 5-year term, the inflation rate is 4%. What is the principal value of the bond at the end of 5 years?
A. $1,000
B. $1,200
C. $1,219
D. $1,440
A TIPS bond is issued in the principal amount of $1,000, paying 3.5%. Over the security's 5-year term, the inflation rate is 4%. What is the principal value of the bond at the end of 5 years?
A. $1,000
B. $1,200
C. $1,219
D. $1,440