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About Government/Agency Bonds

Inflation-Protected Securities Glossary

Auction

Sealed-bid public sale of Treasury securities; method of determining the rate or yield.

Bill

A short-term direct obligation of the U.S. Treasury that has a maturity of not more than one year (for example, 4 -, 13- or 26- week maturity).

Bond

A long-term direct obligation of the U.S. Treasury that typically has a maturity of more than 10 years (for example, a 30-year maturity).

Book-entry security

A security, the issuance and maintenance of which are represented by an accounting entry or electronic record and not by a certificate.

CPI-U

The nonseasonally adjusted U.S. City Average All Items Consumer Price Index for All Urban Consumers, published by the Bureau of Labor Statistics of the U.S. Department of Labor. Index ratio: For any particular date and any particular inflation-protected security, the Reference CPI-U applicable to such date divided by the Reference CPI-U applicable to the original issue date (or dated date, when the dated date is different from the original issue date). Inflation-adjusted principal: For an inflation-protected security, the principal amount of the security, derived by multiplying the par amount by the applicable index ratio.

Interest rate

The annual percentage rate of interest paid on the inflation-adjusted principal of a specific issue of notes or bonds.

Note

A medium-term direct obligation of the U.S. Treasury that has a maturity of at least one year but not more than 10 years.

Par amount

The stated principal amount of a security at original issuance.

Real yield

For an inflation-indexed security, the yield based on the payment stream in constant dollars, i.e., before adjustment by the index ratio.

STRIPS (Separate Trading of Registered Interest and Principal of Securities)

The Treasury Department’s program under which eligible securities are authorized to be separated into principal and interest components, and transferred separately. These components are maintained in commercial book-entry accounts and transferred in TRADES (Treasury/ Reserve Automated Debt Entry System).

Yield

For an inflation-indexed security, yield means the real yield.

 

All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association from our membership and other sources believed by the Association to be accurate and reliable. By providing this general information, the Securities Industry and Financial Markets Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and sources may be required to make informed investment decisions.