If the Yield to Maturity for a Par Value TIPS

question 88

Multiple Choice

If the yield to maturity for a par value TIPS bond with 8 years to maturity is 3%, and the yield to maturity of a U.S Treasury note with 8 years is 4.25%, this implies that

• A)The expected annual rate of inflation over the next 8 years is-1.25%.
• B)The expected annual rate of inflation over the next 8 years is 1.25%.
• C)The expected annual rate of inflation over the next 8 years is -2.25%
• D)The expected annual rate of inflation over the next 8 years is 2.25%
• E)None of the above.

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Definitions:

Inventory Error

An incorrect calculation or reporting of inventory quantity or value, which can affect financial statements.