E.4:TIPS Capital Return Consider a 4.00 percent TIPS with an issue CPI reference of 184.70. At...

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E.4:TIPS Capital Return Consider a 4.00 percent TIPS with an issue CPI reference of 184.70. At...

E.4:TIPS Capital Return Consider a 4.00 percent TIPS with an issue CPI reference of 184.70. At the beginning of this year, the CPI was 196.40 and was at 201.50 at the end of the year. What was the capital gain of the TIPS in dollars? (Round your answer to 2 decimal places.)

$16.80

$27.61

$11.70

$5.10

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Answer 1

Answer #1

Solution:

Capital gain = End of year value - Beginning of year value

Capital gain = ( 201.50/184.70*1000) - ( 196.40/184.70*1000)

Capital gain = $1090.96 - $1063.35 = $27.61

Option B I.e. $27.61 is correct

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Answer 2

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