Inflation-indexed bonds are Canadian Treasury securities where the coupon rate is
A) Zero
B) Indexed to the rate of inflation.
C) Indexed to the discount rate.
D) Indexed to the prime rate.
E) None of the above.

Question

Quizplus · Accepted Answer

Inflation-indexed bonds are securities where the interest payments and principal value are adjusted for inflation. Therefore, the coupon rate is indexed to the rate of inflation. Choice B accurately describes this feature of inflation-indexed bonds.

Inflation-Indexed Bonds Are Canadian Treasury Securities Where the Coupon Rate