Concept explainers
Treasury Inflation-Protected Securities (TIPS): The U.S Treasury issues this type of securities to raise funds for the federal government. Treasury Inflation-protected Securities are an inflation-indexed bond. The outstanding principal of these securities will get adjusted for inflation and the coupon rate remains fixed and coupons are paid semi-annually. In this type of securities even if the coupon is fixed, as the principal amount changes with inflation and it gets adjusted to inflation and the coupon amount is calculated on the basis of adjusted principle, due coupon amount varies. The inflation-adjusted principal amount is calculated on the basis Consumer Price Index.
To determine: The principle and coupon payment made on January 15, 2018.
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