An investor is considering floating-rate debt and
An investor is considering floating-rate debt and other investments to protect against unexpected increases in inflation. Her friend states: 1) Treasury Inflation Protected Securities (TIPS) is suitable because the coupon rate is adjusted for inflation semiannually. 2) On-the-run Treasury issues have narrower bid-ask spreads than other Treasury issues.
A. Only statement 1 is correct.
B. Only statement 2 is correct.
C. Both statement 1 and 2 are correct.
参考解答
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2024-11-14 20:41:52
Ans:B;
The friend is incorrect about TIPS because the coupon is fixed and par value is adjusted for inflation.
The friend is correct about the bid-ask spread for the on-the-run issues because they are more liquid and, thus, have a narrower-bid-ask spread.
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