Question

Nazim also recently bought bonds that have their interest rate tied to the consumer price index (CPI) so that he will be protected if inflation rates increase.
Nazim has invested in:___________________.
purchasing power bonds
income bonds

Answer 1

Answer:

purchasing power bonds

Explanation:

The whole idea behind constant purchasing power bonds is that when they are redeemed, the amount of money received by the bondholder will hold a stable amount of purchasing power instead of a nominal amount of dollars.  

This type of bonds are similar to inflation-linked bonds which are adjusted to the value of the CPI.

The whole idea is that the bonds will always yield real interest rates.