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An American investor buys a TIPS, a capital-indexed coupon-paying bond issued in $US by the US government. The investor faces: (a) Interest rate risk and

An American investor buys a TIPS, a capital-indexed coupon-paying bond issued in $US by the US government. The investor faces: (a) Interest rate risk and inflation risk but not default risk. (b) Interest rate risk and default risk but not inflation risk. (c) Inflation risk but not interest rate risk or default risk. (d) Interest rate risk but not inflation risk or default risk. (e) Inflation risk and interest rate risk but not default risk.

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