The treasury notes that provide returns tied to inflation rate are classified as
Correct answer: D. inflation index bonds
- A. clean price bonds
- B. discount index bonds
- C. premium index bonds
- D. inflation index bonds
Explanation
Inflation-index bonds, such as Treasury Inflation-Protected Securities, adjust their principal or returns in line with inflation. This protects investors from losing purchasing power as prices rise.
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About Business Finance
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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