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Wednesday, 8 February 2012

Only capital indexed inflation-linked bonds maintain the real value of capital


Only capital indexed inflation-linked bonds maintain the real value of capital

Only capital indexed inflation-linked bonds maintain the real value of the capital amount during inflation. A capital indexed inflation-linked bond´s capital value is maintained constant during inflation as well as the real value of the periodic coupon payments.

A coupon indexed inflation-linked bond´s capital values is a nominal value. It´s real value is not maintained constant during inflation.


Nicolaas Smith

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