Q215
Treasury notes that provide returns tied to inflation rate are classified as
A.
clean price bonds
B.
discount index bonds
C.
premium index bonds
D.
inflation index bonds
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Treasury notes that provide returns tied to inflation rate are classified as inflation index bonds. Inflation Indexed Bond (IIB) is a bond issued by the Sovereign, which provides the investor a constant return irrespective of the level of inflation in the economy. The main objective of Inflation Indexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.