SIE practice questionmediumTIPS
Treasury Inflation-Protected Securities (TIPS) protect investors from which risk?
- ACredit default risk
- BInflation risk✓ Correct answer
- CInterest rate risk
- DPrepayment risk
Explanation
Why B — Inflation risk
TIPS principal is adjusted for inflation, protecting against inflation risk. Credit risk is minimal for Treasury securities, and TIPS do not address interest rate or prepayment risks.
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