1. Which of following security offer inflation protection for coupon payment?

A. TIPS Only

B. Fixed Rate Bonds and TIPS

C. TIPS and Floating Rate Notes

2. When the trading volume of a bond increases and thus the trading cost goes down, the liquidity premium charge on this bond?

A. Increased

B. Decreased

C. Unchanged

3. Which of the following statement is true about the benefit of holding bonds:

A. High correlation with Stock Mkt makes bonds desirable for diversify

B. Some types of bonds help investors preserve purchasing power

C. Central Bank increase interest rate when the economy is weak

D. A & B