(Solved): Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of 5 ...

Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of

paid annually. If you buy the bond at its face value of

, and the inflation rate is

in each year. a. What will be your cash flow in year 1? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Cash flow b. What will be your cash flow in year 2? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Cash flow c. What will be your real rate of return over the two-year period? Note: Enter your answer as a percent rounded to 1 dg?ximal place. Real rate of return