Page 18, chapter 40 section 4.2 capital proceeds: some investments provide defined levels of capital on defined dates or range of dates. level may be certain in monetary or real terms. My question is: are there really bonds in which capital proceeds are defined in real terms? I wouldve thought that the income payments are linked to some index, say earnings inflation, and capital is fixed, which makes it an inflation linked bond. Just curious, as I havent encountered these in all of studies and work! Thanks.
Hi - I am not sure whether I have understood your question correctly, but I can confirm that the principal (and therefore capital redemption) amount is adjusted by inflation (as well as the income amounts being adjusted by inflation) for index-linked bonds such as those issued by the UK government.
Hi, you got the question right. Okay, understood. Just that I haven't seen such products in the course material, so wanted to know if they do exist. Thanks.
No problem. There's a little more about index-linked bonds in Section 2 of Chapter 14 of the course notes, which might help.
