Definition of Treasury Inflation-Protected Security (TIPS)
What is a Treasury Inflation-Protected Security (TIPS)
A Treasury inflation-protected security (TIPS) is a US government debt-obligation that will adjust for inflation. TIPS have maturities of 5, 10 and 30 years
The inflation component, which affects principal, is based upon the Consumer Price Index (CPI), where it adjusts upward for inflation or downward for deflation. The adjustment will impact the semi-annual interest paid and the principal at maturity. Since TIPS principal adjusts semi-annually, the coupon rate varies as well.
At maturity, a TIPS will pay the greater of the adjusted or original principal. The inflation provision protects the investor from the loss of any principal in the event of a sustained period of deflation.
GlobEx Markets Financial Dictionary of Terms, Phrases and Concepts
The GlobEx Markets financial dictionary is a reference resource that provides the definitions and explanations of various financial terms, phrases and concepts that are used in international finance and global investing. It includes a broad range of financial terms, such as those related to stocks, bonds, currencies, commodities, options, futures, crypto and much more.
A financial dictionary can be useful for anyone who wants to learn more about finance and investing, or who works in the financial industry. It can help clarify the meaning of technical terms and the language used in financial publications, reports and other sources.
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There are several benefits to using the GlobEx Markets financial dictionary, including:
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Overall, the GlobEx Markets financial dictionary can help improve your understanding of international finance and global investing. It is a valuable tool for anyone who works in the financial industry or who wants to improve their financial literacy.