If an Investor Purchases a 3%,5-Year TIPS at Its Par

question 50

Multiple Choice

If an investor purchases a 3%,5-year TIPS at its par value of $1,000 and the CPI increases 3% over each of the next 5 years,what will be the real value of the principal at maturity?

• A) $1,000.00
• B) $1,030.00
• C) $1,060.90
• D) $1,061.36

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Definitions:

European Market

The collective market of the member countries of the European Union, characterized by free trade and movement of goods, services, capital, and labor.

Price Elasticity of Demand

An evaluation of how the requested quantity of a good is influenced by modifications in its cost.

Price Coefficient

A numerical value that represents the degree to which price affects demand or supply for a good or service.

Primary Copper

Copper in its metallic form as found in nature, typically extracted via mining and used as a raw material for further refinement and use in various applications.