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Treasury notes that offer inflation-linked yields are categorised asa.Clean price bondsb.Bonds based on inflationc.indexed discount bondsd.high-priced index bonds

Question

Treasury notes that offer inflation-linked yields are categorised asa.Clean price bondsb.Bonds based on inflationc.indexed discount bondsd.high-priced index bonds

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Solution 1

Treasury notes that offer inflation-linked yields are categorised as Bonds based on inflation.

Here's why:

a. Clean price bonds: This refers to the price of a bond excluding any interest that has accrued. Inflation-linked yields are not a characteristic of clean price bonds.

b. Bonds based on inflation: These are bonds where the interest rate is tied to the inflation rate. Therefore, treasury notes that offer inflation-linked yields fall under this category.

c. Indexed discount bonds: These are bonds that are sold at a discount and their value is linked to a specific price index. While they may be influenced by inflation, they are not specifically categorised by offering inflation-linked yields.

d. High-priced index bonds: This term is not commonly used in finance and does not specifically refer to bonds offering inflation-linked yields.

This problem has been solved

Solution 2

Treasury notes that offer inflation-linked yields are categorised as Bonds based on inflation.

Here's why:

a. Clean price bonds: This refers to the price of a bond excluding any interest that has accrued. Inflation-linked yields are not a characteristic of clean price bonds.

b. Bonds based on inflation: These are bonds that are designed to help protect investors from inflation. These bonds' interest rates are adjusted periodically to match inflation rates. Therefore, Treasury notes that offer inflation-linked yields fall under this category.

c. Indexed discount bonds: These are bonds that are sold at a discount and their value increases with the inflation index. While they are linked to inflation, they do not offer inflation-linked yields.

d. High-priced index bonds: This term is not standard in finance. It could refer to bonds that are priced high and are indexed, but it does not specifically refer to bonds offering inflation-linked yields.

This problem has been solved

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