TIPS Capital Return Consider a 2.25% TIPS with an issue CPI reference of 183.5. At the beginning of this year, the CPI was 197.1 and was at 203.8 at the end of the year. What was the capital gain of the TIPS in dollars and in percentage terms?

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TIPS Capital Return Consider a 2.25% TIPS with an issue CPI reference of 183.5. At the beginning of this year, the CPI was 197.1 and was at 203.8 at the end of the year.  What was the capital gain of the TIPS in dollars and in percentage terms?

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gain = end of year value – beginning of year value =

203.8/183.5 × $1,000 − 197.1/183.5 × $1,000 = $1,110.63 − $1,074.11 = $36.52

As a percentage, the gain was = $36.52 ÷ $1,074.11 = 3.40%

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