You Purchase a Treasury Inflation-Protected Note with an Original Principal

question 3

Multiple Choice

You purchase a Treasury inflation-protected note with an original principal amount of $1,000,000 and a 2.8 percent annual coupon (paid semiannually) . What will the first coupon payment be if the semiannual inflation over the first six months is 1.2%?

• A) $14,168
• B) $14,000
• C) $28,336
• D) $28,000
• E) $12,336

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