IFoA SP5 Practice Questions - IFoA SP5 Investment And Finance Specialist Principles Exam

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Which feature is the defining characteristic of an index-linked government bond compared with a conventional government bond?

It is redeemable at the option of the issuer at any time It pays no coupon and is issued at a deep discount to par It pays a higher fixed coupon to compensate for default risk Its coupon and redemption payments are adjusted in line with a specified inflation index

Correct Answer:

Its coupon and redemption payments are adjusted in line with a specified inflation index

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