Index-Linked Bond
Definition
What is Index-Linked Bond?
A bond whose payments are linked to an index such as inflationA sustained increase in the general price level, reducing the purchasing power of money., a commodityA standardised physical good such as gold, crude oil, wheat, or cocoa. price, or an interest rateThe price of borrowing money or the return paid for lending it..
Example in practice
How This Looks in Practice
The coupon adjusts with a consumer-price index.
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Related Terms
Bond
A debt security through which an investor lends money to an issuer in return for promised payments.
Fixed IncomeIssuer
The government, company, or organisation that creates and sells a security.
Fixed IncomeFace Value
The principal amount stated on a bond and usually repaid at maturity.
Money MarketsTreasury Bill
A short-term government debt instrument usually issued at a discount and repaid at face value.