Question

A semiannual TIPS was issued in December 2017 with a face value of $1,000 and a coupon rate of 1.2%. What coupon payment it must have paid in December 2018 if the CPI was 247.91 in December 2017 and 251.23 in June 2018?

Answer 1

The coupon payment = $6.08

Step-by-step explanation:

The coupon payment = Face value*Coupon rate / 2*CPI June 2017 / CPI December 2018

The coupon payment = $1,000*1.2% / 2*251.23 / 247.91

The coupon payment = 6.08035174055

The coupon payment = $6.08