TIPS Capital Return Consider a 3

question 102

Multiple Choice

TIPS Capital Return Consider a 3.25% TIPS with an issue CPI reference of 186.7. At the beginning of this year, the CPI was 197.5 and was at 202.4 at the end of the year. What was the capital gain of the TIPS in dollars? (Assume semi-annual interest payments and $1,000 par value.)

• A) $4.90
• B) $10.80
• C) $15.70
• D) $26.25

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Definitions:

Unusually Low

Pertains to a value or level that is significantly below what is considered normal or typical.

Higher

At an elevated level in terms of quality, amount, or degree compared to something else.

Illusory Correlation

The false perception of a relationship between two variables that are either weakly correlated or not correlated at all.

Athletic Socks

Socks designed for sports and physical activity, offering support, cushioning, and moisture-wicking properties.