Which type of security is specifically designed to protect investors against inflation risk?

Which type of security is specifically

Multiple choice — select the best answer

ACorporate bonds
BMunicipal bonds
CZero-coupon bonds
DTreasury Inflation-Protected Securities (TIPS)

✓ Correct answer: D. Treasury Inflation-Protected Securities (TIPS) TIPS have their principal adjusted by changes in the CPI. As inflation rises, the principal increases, so interest payments (a fixed percentage of adjusted principal) also rise, protecting purchasing power.

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Topic: Economic Factors

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Which type of security is specifically designed to protect investors against inflation risk?

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