The US Treasury Issues Inflation-Indexed Bonds, Known as Treasury Inflation Protection

Multiple Choice

The U.S. Treasury issues inflation-indexed bonds, known as Treasury Inflation Protection Securities (TIPS) , as a way for investors to offset inflation risk in their portfolios, some aspects include:

A) The TIPS investor's real rate of return does not change
B) In an inflationary environment, both the face value of the bond and its interest earnings are adjusted upward
C) Not all inflation risk is eliminated because rising inflation can drive an investor into a higher tax bracket
D) All of the above
E) Choices B and C only