Assume a $1,000 Treasury inflation-protected bond has a 2 percent coupon and a face value at issuance of $1,000. The reference CPI is 202.34 and the current CPI is 203.18. What do you know for certain about this bond?
Multiple choice question.
The current par value is $1,000.
The coupon rate is still 2 percent but the interest payments have increased.
The current par value is $1,000 but the coupon rate is currently greater than 2 percent.