What Is the Difference Between an Inflation-Indexed Treasury Bond,and a Treasury

question 46

Multiple Choice

What is the difference between an inflation-indexed Treasury bond,and a Treasury bond that is not indexed?

• A) An inflation-indexed Treasury bond guarantees a certain real rate of return,while a nonindexed Treasury bond does not.
• B) A nonindexed Treasury bond guarantees a certain real rate of return,while a nonindexed Treasury bond does not.
• C) An inflation-indexed Treasury bond can only be purchased directly from the Federal Reserve,while a nonindexed Treasury can be purchased through a broker.
• D) An inflation-indexed Treasury bond always guarantees the purchaser a 5 percent rate of return,while a nonindexed Treasury bond does not.

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Definitions:

Written Confirmation

A document that records and verifies specific details of an agreement or transaction between two or more parties.

Merchant

An individual or company engaged in the wholesale purchase and retail sale of goods for profit.

Usage of Trade

Customary practices and usages that parties to a transaction in a particular trade commonly observe.

Commercial Dealing

Activities involved in the purchase and sale of goods and services in the marketplace.