infinitybenzo

But why is the payment to retirees sensitive to CPI? Isn't the payment supposed to be fixed?

alaaq80 Wrote:
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> Hi , in #2, bonds that are sensitive to CPI are
> mimicked by real growth bond (unexpected
> inflation) as well as future pmts.
> in #3, bonds and future pmts not sensitive to CPI
> or equity are considered as future payments to be
> mimicked by nominal bonds. Note the similarities
> between those liabilities and nominal bonds as
> both are considering expected inflation only.