Treasury Inflation-Protected Securities (TIPS)
Treasury Inflation-Protected Securities (TIPS) are U.S. government bonds whose principal is adjusted for inflation according to the Consumer Price Index for All Urban Consumers (CPI-U); coupon payments are calculated on the adjusted principal.
Example: If CPI rises since issuance, the TIPS principal is adjusted upward and the corresponding semiannual interest payments increase because they are based on the adjusted principal.
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