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200
Bonds 207:
Treasury Inflation-Adjusted Securities
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
1.
The main advantage of inflation-adjusted securities is _______.
Choose wisely. There is only one correct answer.
They will help you reduce your taxes
They offer an investment that maintains its purchasing power
They are not affected by interest rates
They offer an investment that maintains its purchasing power. They manage this by paying interest rates that stay ahead of inflation.
2.
A bond's principal will lose its purchasing power over time unless it is adjusted for inflation.
Choose wisely. There is only one correct answer.
True
False
True. That is why some bonds adjust their interest rates to stay ahead of inflation.
3.
The time when a bond pays you back your principal is called its _______.
Choose wisely. There is only one correct answer.
Par value
Maturity
CPI-U
Maturity. The maturity is the date on which you get your principal back.
4.
You don't have to pay state income taxes on interest earned from Treasury inflation-adjusted securities.
Choose wisely. There is only one correct answer.
True
False
True. You are exempt from state income taxes on interest earned from Treasury inflation-adjusted securities.
5.
Treasury inflation-adjusted securities come in maturities of five or 10 years.
Choose wisely. There is only one correct answer.
True
False
True. Maturities are for five or 10 years.
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DONE