Question

A 4.15 percent TIPS has an original reference CPI of 182.1. If the current CPI is 188.3, what is the par value of the TIPS?

Answer 1

Answer:

par value of the TIPS is $1034.05

Step-by-step explanation:

Given:

-  original reference CPI = 182.1

- current CPI = 188.3

Assume face value of tips = $1000

par value of the TIPS = $face\ value\ of\ tips\times \frac{current\ CPI}{original\ reference\ CPI}$

par value of the TIPS = $1000\times \frac{188.3}{182.1}\approx 1034.05$