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 ?
The expected inflation rate over the next ten years implied by the inflation-indexed bonds rose 0.
One can also look at tax-free bonds, non-convertible debentures, or NCDs, and inflation-indexed bonds.
The 10-year inflation-indexed bonds launched earlier this year, linked to the Wholesale Price Index could not attract much interest from investors.
Although the popular press often labels inflation-indexed bonds as "exotic securities," nothing could be farther from reality.
The finance minister also made several promises: A pilot programme to promote micro-nutrients, a National Livestock Mission, inflation-indexed bonds, a new corporate tax avoidance tax from 2016, a direct tax code and a new bill for a pan-India goods and services tax this session.
Plans to issue inflation-indexed bonds * Proposes capital allowance of 15 pct to companies on investments of more than 1 billion rupees
The topics discussed include rediscovering the macroeconomic roots of financial stability policy, inflation-indexed bonds and the expectations hypothesis, the economics of credit default swaps, equilibrium in the initial public offering market, and carry trade and momentum in currency markets.
Also, the rate-setting mechanism will be modified to ensure that the coupon rate of the inflation-indexed bonds accurately reflects the market rate.
In the US, inflation-indexed bonds issued by the Federal government are called TIPS (Treasury Inflation Protected Securities).
For endowments and foundations, it's inflation-indexed bonds, and real assets like real estate.
Sure, some might argue that inflation-indexed bonds offer a better and more direct inflation hedge than gold.
Treasury Inflation-Protection Securities are taxed under the general rules applicable to inflation-indexed bonds (see Q 1108).