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Bonds 207: Treasury Inflation-Adjusted Securities

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1.
Issuing inflation-adjusted securities reduces the interest costs of the US Treasury department.
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True. The Treasury department saves on interest costs in this way.
2.
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. A bond's reference CPI-U is actually the CPI from three months prior to the bond's issue date.
3.
Inflation is the continuous rise of prices over time.
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True. When we speak of the rising of prices, we call it "inflation."
4.
The process of selling a bond's coupons and principal separately is called stripping.
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True. Stripping involves separating the two from each other.
5.
If you earn interest on an inflation-adjusted bond, _______.
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The income is taxed as ordinary income by the IRS. If you earn interest on an inflation-adjusted bond, the income is taxed as ordinary income by the IRS.