Choose wisely. There is only one correct answer to each question.
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1.
Before you add commodities to your portfolio to hedge against inflation, what should you do?
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.
2.
When a TIPS bond matures, what does the bondholder receive?
The bonds original value or the value adjusted upward for inflation, whichever is greater.
3.
Treasury inflation-protected securities are backed by _______.
The US government. That adds an element of safety to inflation-conscious investors.
4.
TIPS bonds _______ are regularly adjusted to reflect changes in inflation.
Principal values. The principal values are adjusted as needed; this, in turn, will affect the interest payments that are made.
5.
What is the major reason for stocks being good inflation hedges?
Their potential for high returns. Their returns can be potentially higher than those of bonds.