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:

Gathering Information

The process of collecting data or insights to inform decisions or understand situations.

Sensing

Gathering information through the five senses and focusing on what actually exists.

Escalation of Commitment

Describes a pattern of behavior in which individuals continue to invest time, money, or effort into a decision or action despite evidence of its failure, often due to a desire to justify prior commitments.

Splitting Responsibility

Dividing duties, tasks, or obligations among individuals or groups to ensure accountability and efficiency in achieving objectives.