Question

Which one of the types of bonds protect investor from inflation

Answer 1

What Are Inflation-Protected Securities?

When you purchase a normal bond, you know what your nominal return will be at maturity (assuming there is no default). But you don't know your real rate of return because you do not know what inflation will be during the life of your bond. The opposite occurs with an IPS. Instead of guaranteeing you a nominal return, the IPS guarantees you a real return. So, you know your real rate of return but not your nominal return. This is again because you do not know the rate of inflation during the life of your IPS. (Learn about another type of bond in Introduction