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1.
Inflation is the continuous rise of prices over time.
True. When we speak of the rising of prices, we call it "inflation."
2.
The principal of an inflation-adjusted bond is always guaranteed to its investor.
False. The principal of an inflation-adjusted bond is guaranteed by the full faith and credit of the US government if an investor holds onto it until its maturity.
3.
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.
4.
You don't have to pay state income taxes on interest earned from Treasury inflation-adjusted securities.
True. You are exempt from state income taxes on interest earned from Treasury inflation-adjusted securities.
5.
Treasury inflation-adjusted securities come in maturities of five or 10 years.