Which of the Following Statements Is True Regarding TIPS

question 50

Multiple Choice

Which of the following statements is true regarding TIPS?

• A) As inflation changes, the interest rate on the bond is adjusted.
• B) The correlation between TIPS and the S&P 500 Index has often been negative.
• C) TIPS are more volatile than regular Treasury bonds of similar maturity.
• D) The return on TIPS is often lower than the inflation rate.

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Definitions:

Regular Dividends

Regular dividends are distributions of profit that a company decides to share with its shareholders on a recurring basis, typically quarterly or annually.

Stockholders' Equity

The remaining value of a corporation's assets after all liabilities have been subtracted, signifying the shareholders' ownership stake.

Comprehensive Income

All changes in stockholders’ equity during a period, except those resulting from dividends and stockholders’ investments.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income or loss over a specified period.