CFA Practice Question

CFA Practice Question

Consider a TIPS with a face value of $1,000 and annual coupon of 5%. Suppose during the first six months inflation is 4% (annualized 8%). Then at the end of the six months, the face value of the TIPS will be increased to:
A. $1,040
B. $1,025
C. $1,050
Explanation: It is increased to the amount of inflation over the period over which inflation has occurred.

User Contributed Comments 0

You need to log in first to add your comment.