Inflation-indexed bonds ensure that investors will received the promised yield in real terms by indexing bond principal and interest payments to the stock market.

Question

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Inflation-indexed bonds are typically indexed to the Consumer Price Index (CPI), not the stock market. This ensures that investors receive the promised yield in real terms by adjusting principal and interest payments according to changes in the CPI.

Inflation-Indexed Bonds Ensure That Investors Will Received the Promised Yield