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inflation-indexed security

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Inflation-Indexed Security
A security that guarantees a return higher than the rate of inflation if it is held to maturity.

Notes:
In other words, an inflation-indexed security guarantees a real return. These usually come in the form of a bond or note.

inflation-indexed security
A security with a rate of return linked to some specified measure of inflation. For example, Series I U.S. savings bonds pay holders a specified fixed rate adjusted for changes in the consumer price index.


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Example 1: A $100,000 face value inflation-indexed security issued at par in January 2001 bears 5% interest and matures in four years.
Inflation-indexed debt instruments by Vines, Timothy W. / The Tax Adviser
Because the payments automatically adjust to compensate for inflation, the yield on an inflation-indexed security reflects the real rate of return that would be realized over the maturity of the security.
The Treasury Securities Market: Overview and Recent Developments by Archambeault, Emilie / Federal Reserve Bulletin
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