Consider a newly issued TIPS bond with a three year maturity, par value of $1000, and a coupon rate of 5%. Assume annual coupon payments. 
What is the nominal rate of return on the TIPS bond in the first year?
Definitions:
Principal Balance
The original amount of money lent or invested, before any interest or profit is added to it or any payments are made.
Amortized
Definition: The process of spreading out a loan into a series of fixed payments over time.
Equal Payments
Regular payments of the same amount over a specified period, commonly used in loan repayment schedules.
First Payment
The initial amount paid at the start of a financial agreement or loan.
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