TIPS Principal Adjustment - Quant Trader Interview Question
Difficulty: Medium
Category: Algorithms & Data Structures
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Topics: fixed-income, TIPS, inflation, CPI, bond-valuation
Problem Description
You are analyzing a Treasury Inflation-Protected Security (TIPS) with an initial principal of 1,000 dollars. The original Consumer Price Index (CPI) at issuance was 250. One year later, the CPI is reported as 260. What is the adjusted principal of the TIPS bond after this one-year period?
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