Dillon can buy a fixed-rate bond with a 4% coupon, a $10,000 principal, and five years left to maturity or a TIPS with the same principal and age to maturity with a 2% coupon. Compare the two bonds if inflation runs 3% per year on average. Select the best answer from the choices provided. 1The fixed-rate bond has a better yield.2 The TIPS has a better yield.3 Both yields are roughly equivalent. 4The yields vary with inflation.