The principal amount in the Treasury Inflation Protection Securities is considered as ____________?
Correct answer: B. inflation adjusted principal
- A. tax adjusted principal
- B. inflation adjusted principal
- C. auction adjusted principal
- D. premium adjusted principal
Explanation
Treasury Inflation-Protected Securities adjust their principal according to changes in the Consumer Price Index, so the relevant amount is the inflation-adjusted principal. Interest payments are then calculated on that adjusted principal.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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