If an investor purchases a 4%, 5-year TIPS at its par value of $1,000 and O $1,000.00 O $1,040.00 O $1,060.90 O $1,061.36 CPI increases 4% over each of the next 5 years, what will be the real value of the principal at maturity?

If an investor purchases a 4%, 5-year TIPS at its par value of $1,000 and O $1,000.00 O $1,040.00 O $1,060.90 O $1,061.36 CPI increases 4% over each of the next 5 years, what will be the real value of the principal at maturity?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 4P

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Question

If an investor purchases a 4%, 5-year TIPS at its par value of $1,000 and the CPI increases 4% over each of the next 5 years, what will be the real value of the principal at maturity?
O $1,000.00
O $1,040.00
O $1,060.90
O $1,061.36

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