How Are TIPS Adjusted for Inflation

question 27

Multiple Choice

How are TIPS adjusted for inflation?

• A) The interest rate is adjusted for inflation during each period.
• B) The principal is adjusted once the bond reaches maturity.
• C) The principal is adjusted for inflation each period.
• D) The interest rate is adjusted once the bond reaches maturity.

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Definitions:

Privity of Contract

The principle that a contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it.

Doctrine of Privity

A legal principle stating that contracts are binding only upon the parties signing them, and no third-party can enforce or be obligated by the contract.

Progress Payments

Payments made through the course of a project or contract based on the completion of specified stages of work.

Purchase Money Security Interest

A legal claim that allows creditors to repossess property if the purchaser fails to make payment.