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1.
A bond's reference CPI-U is actually the CPI from three months prior to the bond's issue date.
True. A bond's reference CPI-U is actually the CPI from three months prior to the bond's issue date.
2.
Treasury inflation-adjusted securities come in maturities of five or 10 years.
True. Maturities are for five or 10 years.
3.
If you earn interest on an inflation-adjusted bond, _______.
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.
4.
Par value measures the effects of inflation.
False. The CPI-U measures the effects of inflation.
5.
The main advantage of inflation-adjusted securities is _______.
They offer an investment that maintains its purchasing power. They manage this by paying interest rates that stay ahead of inflation.