All Courses > Portfolios > 400
Portfolios 406: How to Inflation-Protect Your Portfolio

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
When a TIPS bond matures, what does the bondholder receive?
Choose wisely. There is only one correct answer.
The bonds original value or the value adjusted upward for inflation, whichever is greater.
2.
Stocks are an indirect way to protect your portfolio against the threat of inflation.
Choose wisely. There is only one correct answer.
True. Stocks have the potential for higher returns than bonds, and inflation will take a smaller bite, in percentage terms, out of your future purchasing power.
3.
Before you add commodities to your portfolio to hedge against inflation, what should you do?
Choose wisely. There is only one correct answer.
Both of the above. Emerging markets tend to be heavy on basic-material producers, and they in turn are beneficiaries of higher demand and prices. And although owning energy stocks is not the same as owning commodities directly, energy stocks have a fairly high correlation with energy prices.
4.
What is the major reason for stocks being good inflation hedges?
Choose wisely. There is only one correct answer.
Their potential for high returns. Their returns can be potentially higher than those of bonds.
5.
TIPS bonds _______ are regularly adjusted to reflect changes in inflation.
Choose wisely. There is only one correct answer.
Principal values. The principal values are adjusted as needed; this, in turn, will affect the interest payments that are made.