Consider a newly issued TIPS bond with a 3-year maturity, pa…

Consider a newly issued TIPS bond with a 3-year maturity, par value of $1,000.00, and coupon rate of 4.50%. Assume annual coupon payments. Time Inflation in year just ended Par value Coupon payment + Principal repayment = Total payment 0 $1,000.00 1 2.5% $1,025.00 $46.13 0 $46.13 2 1.5% $1,040.38 $46.82 0 $46.82 3 3.5% $1,076.79 $48.46 $1,076.79 $1,125.25 What is the nominal rate of return on the TIPS bond in the first year?