Inflation-indexed securities

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Inflation-indexed securities

Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity.

Inflation-Indexed Securities

A bond or other fixed-rate security with an interest rate that varies according to inflation. An inflation-indexed bond, for example, may pay a fixed coupon plus an additional coupon with the amount adjusted every so often according to some inflation indicator, such as the Consumer Price Index. If these securities are held to maturity, then the investor guarantees that the return will exceed the rate of inflation. Inflation-indexed securities exist to provide a low-risk investment vehicle in which the return is guaranteed not to fall below the rate of inflation. See also: I Bond.
References in periodicals archive ?
First, the standard risk premium theories do not seem to explain much of the actual movements in inflation-indexed bond yields.
The Treasury Department's new inflation-indexed bond will react to changes in interest rates in novel ways.
inflation-indexed bond market, which, in August 2003, had a total outstanding dollar value of about $150 billion and represented approximately 6 percent of the U.
With an inflation-indexed bond investment of $1,000, a 2% consumer price-index increase would boost the maturity value of your holding to $1,020.
12) Ten-year inflation-indexed bonds are commonplace in some markets, for instance in the United States where they have been issued since the inception of its inflation-indexed bond program in 1997.
Munson served as portfolio manager for the SDCERA Value and inflation-indexed bond portfolios.
GMO Inflation Indexed Bond Fund provides exposure to the inflation-indexed bond universe and may be an appropriate vehicle for investors who are concerned about inflation and wish to preserve purchasing power.
Harris said the family has grown by five bond funds and a balanced fund the past year, including the nation's first inflation-indexed bond fund, the PIMCO Real Return Fund.
t], given by equation (10), is the price of an inflation-indexed bond when utility is CRRA.
Inflation-Indexed Bond Yield = Real Yield + Risk Premium
This regulatory symmetry works well when the rules are applied to either a traditional or an inflation-indexed bond subject to a discount (whether arising on original issue or in a subsequent trade).
Using a simple econometric model to proxy for expectations about current and future short-term rates, the authors succeed in replicating some of the observed changes in long-term inflation-indexed bond yields.