A 10-Year, Capital-Indexed Bond Linked to the Consumer Price Index

Multiple Choice

a 10-year, capital-indexed bond linked to the Consumer Price index (CPi) is issued with a coupon rate of 6% and a par value of 1,000. The bond pays interest semi-annually. During the first six months after the bond's issuance, the CPi increases by 2%. on the First coupon payment date, the bond's:

A) coupon rate increases to 8%.
B) coupon payment is equal to 40.
C) principal amount increases to 1,020.