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:

Unattainable Production

A situation where the level of production desired cannot be achieved with the available resources or technology.

Hybrid Cars

Vehicles that use a combination of an internal combustion engine and one or more electric motors to reduce fuel consumption and emissions.

Opportunity Cost

The value of the best alternative forgone when a decision is made over others.

Hybrid Cars

Vehicles powered by a combination of an internal combustion engine and one or more electric motors, using less fuel and emitting less CO2 than conventional vehicles.