Which one of the following statements related to TIPS is correct assuming an inflationary environment?
A) TIPS have a maturity value of $1,000.
B) TIPS pay an interest payment based on the latest T-bill rate.
C) TIPS pay a fixed coupon rate.
D) The principal amount of a TIPS is adjusted annually for inflation.
E) The interest rate is adjusted semiannually for inflation.
Correct Answer:
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