Inflation-Protected Security (TIPS)

Business / Taxes / Inflation-Protected Security (TIPS): US Treasury inflation-protected securities (TIPS) adust the principal twice a year to reflect inflation or deflation measured by the Consumer Price Index (CPI). The interest rate is fixed and is paid twice a year on the adjusted principal. So if your principal is larger because of inflation you earn more interest. If it's lower because of deflation, you earn less. You can buy TIPS with terms of 5, 10, or 20 year at issue using a TreasuryDirect account or in the secondary market. At maturity you receive either the adjusted principal or par value, whichever is greater. You owe federal income tax on the interest you earn and on inflation adjustments in each year they're added even though you don't receive the increases until the security matures. However, TIPS earnings are exempt from state and local income taxes. These securities provide a safeguard against deflation as well as against inflation since they guarantee that you'll get back no less than par, or face value, at maturity.

Other Words for Security

Security Verb Synonyms: safety, shelter, protection, fastness, refuge, safe keeping, sanctuary, asylum
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Security Deposit (Initial)

Business / Finance / Security Deposit (Initial): Synonymous with the term margin. A cash amount that must be deposited with the broker for each contract as a guarantee of fulfillment of the futures contract. It is not considered as part payment or p MORE

Security Deposit

Business / Real Estate / Security Deposit: Money deposited by or for the tenant with the landlord, to be held by the landlord for the following purposes: 1. to remedy tenant defaults for damage to the premises (be it accidental or intentional) MORE

Security Characteristic Line

Business / Finance / Security Characteristic Line: A plot on a graph of the excess return on a security over the risk-free rate as a function of the excess return on the market. The slope of this line is the security's beta. MORE

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