*abbreviated ‘treasury inflation-protected securities’*
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*’Treasury Inflation-Protected Securities’ (TIPS) are ‘inflation-indexed bonds’ issued by the ‘united states treasury’*
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The principal is adjusted with respect to the ‘Consumer Price Index’ (CPI), the most commonly used measure of ‘inflation’.
When the CPI rises, the principal is adjusted upward;
if the index falls, the principal is adjusted downwards.
The coupon rate is constant, but generates a different amount of interest when multiplied by the inflation-adjusted principal, thus protecting the holder against the inflation rate as measured by the CPI.
TIPS were introduced in 1997
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*TIPS are currently offered in ‘maturities’ of…*
5-year,
10-year and
30-year
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*SKETCHES*
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