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Question
Suppose you bought an inflation-indexed security for $12,000 in January 2013 which pays an annual interest of 4 percent. If the value of the inflation index in January 2013 was 106 and its value in January 2014 was 105, what is the value of the inflation-adjusted principal?a. $12,114.29
b. $11,342.58
c. $8,000.60
d. $13,126.41
Answer
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