TIPS are ________.
A) Treasury bonds that pay no interest and are sold at a discount
B) U.K. bonds that protect investors from default risk
C) securities that trade on the Toronto stock index
D) Treasury bonds that protect investors from inflation

Question

Quizplus · Accepted Answer

TIPS are Treasury Inflation-Protected Securities that protect investors from inflation by adjusting their principal value based on changes in the Consumer Price Index (CPI). They pay interest twice a year based on their fixed rate, which is applied to the adjusted principal value.

TIPS Are ________