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I-bond advantages and disadvantages and the impact of inflation and deflation

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Read "I-Bonds Adjust for Inflation"

1. What effect do you think the inflation-adjusted interest rate has on the price of an I-bond in comparison to similar bonds with no allowance for inflation?

2. What are some of the advantages and disadvantages of purchasing I-bonds over regular bonds?

3. What types of impacts to deflation and inflation have on I-bonds?

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Solution Summary

There are several advantages and disadvantages to the I-Bond. Also, there is an impact on the interest rate paid on an I-bond based on inflation or deflation.

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Read "I-Bonds Adjust for Inflation"

The inflation-adjusted interest rate causes the I-bonds to be sold at face value. The additional interest will added to bond and paid at the time of redemption. Whereas, a regular is sold at less than face value and grows over the term of the bond.

An advantage of an I-bond is that the interest rate will adjust based on inflation changes. Also, the bond will rise along with inflation. Further, the interest rate consists of ...

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