U.S.government bonds that provide for bondholders to receive a fixed rate of interest plus the change in the consumer price index were designed to remove:

Question

Quizplus · Accepted Answer

The U.S. government bonds that provide for bondholders to receive a fixed rate of interest plus the change in the consumer price index are known as Treasury Inflation-Protected Securities (TIPS). TIPS are designed to remove inflation risk, as the interest payments and face value of the bond are adjusted for inflation. TIPS do not eliminate default risk, liquidity risk, or interest-rate risk.

USGovernment Bonds That Provide for Bondholders to Receive a Fixed