A Real Return Bond Has a Coupon Rate of 2

A real return bond has a coupon rate of 2.5% with an initial principal of $10,000. Since issuance, the economy has been experiencing a 2% inflation over a whole-year period. This bond has semi-annual coupon payments.


-How much will be the first coupon payment?

A) $250
B) $125
C) $62.50
D) $500
E) $200