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Income Intermediate: Treasury Inflation-Adjusted Securities

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1.
The main advantage of inflation-adjusted securities is _______.
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They offer an investment that maintains its purchasing power. They manage this by paying interest rates that stay ahead of inflation.
2.
You don't have to pay state income taxes on interest earned from Treasury inflation-adjusted securities.
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True. You are exempt from state income taxes on interest earned from Treasury inflation-adjusted securities.
3.
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.
4.
Par value measures the effects of inflation.
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False. The CPI-U measures the effects of inflation.
5.
In periods of deflation, inflation-adjusted securities will increase in value.
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False. In periods of deflation, inflation-adjusted securities will decrease in value, but not below their par values.