TIPS Total Return Reconsider a 3

question 99

Multiple Choice

TIPS Total Return Reconsider a 3.25% TIPS that was issued with CPI reference of 186.7. The bond is purchased at the beginning of the year (after the interest payment) , when the CPI was 197.5. For the interest in the middle of the year, the CPI was 201.1. Now, at the end of the year, the CPI is 202.4 and the interest payment has been made. What is the total return of the TIPS in percentage terms for the year? (Assume semi-annual interest payments and $1,000 par value.)

• A) 1.6%
• B) 2.4%
• C) 5.8%
• D) 9.1%

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Definitions:

Consolidation

The changes that take place in the structure and functioning of neurons when a memory is formed.

Systematic Desensitization

A therapeutic method involving gradual exposure to a fear-inducing object or context, combined with relaxation exercises, to progressively reduce the intensity of the feared response.

Phobias

Intense, irrational fears of specific objects or situations, significantly impacting an individual's daily functioning.

Progressive Relaxation

A technique for reducing stress and anxiety by tensing and then relaxing each muscle group in the body.