Treasury Inflation-Protected Securities (TIPS)
A)pay a fixed interest rate for life.
B)pay a variable interest rate that is indexed to inflation.
C)provide a constant stream of income in real (inflation-adjusted) dollars.
D)have their principal adjusted in proportion to the Consumer Price Index.
E)C and D

Question

Quizplus · Accepted Answer

Treasury Inflation-Protected Securities (TIPS) provide a constant stream of income in real (inflation-adjusted) dollars, and their principal is adjusted in proportion to the Consumer Price Index. This means that as inflation increases, both the interest payments and principal value of TIPS will increase, helping to protect investors against inflation.