Question
a. What is the measure of the rate of inflation selected by the U.S. Treasury for determining the inflation adjustment for TIPS? b.Suppose that deflation
a. What is the measure of the rate of inflation selected by the U.S. Treasury for determining the inflation adjustment for TIPS?
b.Suppose that deflation over the life of a TIPS issue results in an inflation- adjusted principal at the maturity date that is less than the initial par value. How much will the U.S. Treasury pay at the maturity date to redeem the principal?
c) Why is it necessary for the U.S. Treasury to report a daily index ratio for each TIPS issue?
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Introduction To Finance
Authors: Lawrence J Gitman, Jeff Madura
1st Edition
0201635372, 9780201635379
