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A 10-year TIPS is issued with a coupon rate of 6% and a par value of...

A 10-year TIPS is issued with a coupon rate of 6% and a par value of $1,000. The bond pays interest semi-annually. During the first 6 months after the bond’s issuance, the CPI increases by 2%. On the first coupon payment date, the bond’s:

a. coupon rate increases to 8%

b. coupon payment is equal to 40

c. principal amount increases to 1,020

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