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A 3.125 percent TIPS has an original reference CPI of 185.7. If the current CPI is...

A 3.125 percent TIPS has an original reference CPI of 185.7. If the current CPI is 211.0, what is the par value and current interest payment of the TIPS? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

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Answer #1

Lets assume the original par value is $1000

Current par value = original par value * (current CPI / original CPI)

Current par value = $1000 * (211.0 / 185.7) = $1136.24

current interest payment = current par value * coupon rate = $1136.24 * 3.125% = $35.51

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