QUIZ SS8 - Asset Allocation Inflation / Deflation

[inbead]

Pick the correct statement:
a) For Nominal floating coupon bonds, principal is deflation unprotected and coupon is inflation protected
b) For Nominal fixed coupon bonds, coupon is deflation protected and principal is inflation protected
c) For TIPS, coupon is defalation unprotected and principal is inflation protected

 

[janakisri]

I’d say c if I didn’t know better

 

[deriv108]

c is also the best I can get.
Don’t know much about TIPS. Is TIPS coupon always fixed?

 

[jmac01]

C.

 

[mik82]

A - Principal IS deflation protected, so false
B - Principal is NOT inflation protected, so false
C - Correct

 

[janakisri]

mik , in B did you mean coupon is not deflation protected ? you wrote different

 

[jmac01]

arent you both right?

 

[inbead]

You guys got it right, Its C. Highly testable material IMO

 

[pimpineasy]

yes it is where can you find it in the cfa material?

 

[idreesz]

deriv108 Wrote:
——————————————————-
> c is also the best I can get.
>
> Don’t know much about TIPS. Is TIPS coupon always
> fixed?
C is correct.
Par value of TIPS rises with inflation, as measured by CPI, while their interest rate remains fixed

 

[onelasttime]

pimpineasy Wrote:
——————————————————-
> yes it is where can you find it in the cfa
> material?
Just reread it today in CFAI Text, book 3, page 243. Page 242 is also good too.

 

[team_alex]

Thanks for these!

 

[pimpineasy]

onelasttime Wrote:
——————————————————-
> pimpineasy Wrote:
> ————————————————–
> —–
> > yes it is where can you find it in the cfa
> > material?
>
> Just reread it today in CFAI Text, book 3, page
> 243. Page 242 is also good too.
thanks mate