Treasury notes that provide returns tied to inflation rate are classified as

A. clean price bonds

B. discount index bonds

C. premium index bonds

D. inflation index bonds

Answer: Option D

Solution(By Examveda Team)

Treasury notes that provide returns tied to inflation rate are classified as inflation index bonds. Inflation Indexed Bond (IIB) is a bond issued by the Sovereign, which provides the investor a constant return irrespective of the level of inflation in the economy. The main objective of Inflation Indexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.