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The principal of an inflation-adjusted bond is always guaranteed to its investor.

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True

False

False. The principal of an inflation-adjusted bond is guaranteed by the full faith and credit of the US government if an investor holds onto it until its maturity.

In periods of deflation, inflation-adjusted securities will increase in value.

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True

False

False. In periods of deflation, inflation-adjusted securities will decrease in value, but not below their par values.

The time when a bond pays you back your principal is called its _______.

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Par value

Maturity

CPI-U

Maturity. The maturity is the date on which you get your principal back.

A bond's reference CPI-U is actually the CPI from three months prior to the bond's issue date.

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True

False

True. A bond's reference CPI-U is actually the CPI from three months prior to the bond's issue date.

You don't have to pay state income taxes on interest earned from Treasury inflation-adjusted securities.

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True

False

True. You are exempt from state income taxes on interest earned from Treasury inflation-adjusted securities.

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