Course 207: Treasury Inflation-Adjusted Securities
Bond and Inflation Basics
In this course
1 Introduction
2 Bond and Inflation Basics
3 What Is an Inflation-Adjusted Security?
4 Characteristics of Inflation-Adjusted Securities
5 Advantages of Inflation-Adjusted Securities
6 Taxation of Inflation-Adjusted Securities
7 Invest in the Treasury and Beat Inflation, Too

Here are a few terms common to all types of bonds.

The principal is the amount you originally invest in the bond, which represents a loan made to the organization issuing the bond. The face amount of a bond is due to be repaid when it matures. If you hold your bond until it matures, you get back your entire principal unless the bond defaults.

Treasury inflation-adjusted bonds are adjusted based on the Consumer Price Index (CPI-U). The CPI-U measures the average change over time in the prices urban consumers pay for a given "basket" of goods and services. As prices continuously increase over time, the purchasing power of the consumer's dollar declines. This is called inflation. The CPI-U is the most widely used measure of inflation. The Bureau of Labor Statistics of the US Department of Labor publishes the CPI-U monthly.

Next: What Is an Inflation-Adjusted Security? >>


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