TIPS Capital Return Consider a 3

question 25

Multiple Choice

TIPS Capital Return Consider a 3.75% TIPS with an issue CPI reference of 183.5. At the beginning of this year, the CPI was 190.6 and was at 199.4 at the end of the year. What was the capital gain of the TIPS in percentage terms? (Assume semi-annual interest payments and $1,000 par value.)

• A) 3.75%
• B) 4.62%
• C) 7.10%
• D) 8.80%

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Definitions:

Aggregate Demand

The total demand for all goods and services within an economy at a given overall price level and in a given time period.

Individual Demand

The quantity of a good or service that a single consumer is willing and able to purchase at various prices.

Damaged Goods

Products that have been impaired or harmed in some way, reducing their value, usefulness, or appeal.

High Margins

Refers to a significant difference between the cost of goods sold and the selling price, leading to high profits.