Treasury Inflation-Protected Securities (TIPS)

question 22

Multiple Choice

Treasury Inflation-Protected Securities (TIPS)

• A) pay a fixed interest rate for life.
• B) pay a variable interest rate that is indexed to inflation but maintain a constant principal.
• C) provide a constant stream of income in real (inflation-adjusted) dollars.
• D) have their principal adjusted in proportion to the Consumer Price Index.
• E) provide a constant stream of income in real (inflation-adjusted) dollars and have their principal adjusted in proportion to the Consumer Price Index.

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Definitions:

Average Sale Period

A financial metric that calculates the average time it takes for a company to sell its inventory, indicating the efficiency of sales and inventory management.

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers, indicating the efficiency of the company’s credit and collection policies.

Current Ratio

A measure of a business's capability to meet its obligations due in less than one year, focusing on its short-term financial health.

Company

A legal entity formed by individuals, stockholders, or shareholders, with the purpose of operating for profit.