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Tenagnework Nigussie
on Oct 20, 2024

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Investors will earn higher rates of returns on TIPS than on equivalent default-risk standard bonds if ________.

A) inflation is lower than anticipated over the investment period
B) inflation is higher than anticipated over the investment period
C) the U.S. dollar increases in value against the euro
D) the spread between commercial paper and Treasury securities remains low

TIPS

Treasury Inflation-Protected Securities, a type of U.S. treasury security indexed to inflation to protect investors from the negative effects of rising prices.

Default-Risk

The risk that a borrower fails to make the required payments on a debt obligation, leading to potential losses for the lender or investor.

Higher Rates

Typically refers to an increase in interest rates, which can affect borrowing costs, investment returns, and economic activity.

  • Comprehend the elementary concepts of interest rates, yield computation, and the effects of inflation on financial investments.
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Devin LentzOct 24, 2024
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