Income Intermediate: Treasury Inflation-Adjusted Securities

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1.
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.
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.
Phantom income is taxable income on an inflation-adjusted bond's coupon interest.
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False. Phantom income refers to taxable income on an inflation-adjusted bond's principal interest.
5.
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.