Real return bonds have their par value and coupon payments adjusted by CPI.

Question

Quizplus · Accepted Answer

Real return bonds are designed to provide inflation protection to investors. To achieve this, their coupon payments and par value are adjusted in line with changes in the Consumer Price Index (CPI). This ensures that investors receive a real return on their investment, which takes into account the impact of inflation on the purchasing power of their money.

Real Return Bonds Have Their Par Value and Coupon Payments