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653 viewsOctober 27, 2016

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Darshita 6.14K September 11, 2016 0 Comments

Consider a 3.25% TIPS with an issue CPI reference of 184.80. At the beginning of this year, the CPI was 191.90 and was at 202.00 at the end of the year. What was the capital gain of the TIPS in percentage terms? (Do not round the intermediate steps. Round your final answer to 2 decimal places.)

1 Answer

score 0 · Answer 1 · 2016-09-11T11:54:34+00:00

capital gain = $ 54.65 and percentage terms =5.26%

Working notes for the above answer is as under

Gain will be calculated as follow

Gain = end of the year value – begining of year value

= 202.00 /184.8 x 1000 – 191.90/184.80 x 1000

=1093.074 -1038.42

=54.6537

=54.65

capital gain of the TIPS in percentage terms =

=54.65 / 1038.42

=0.052632

=5.26%