Inflation Indexed Bonds

In: Business and Management

Submitted By dondukare
Words 2468
Pages 10

The importance of Policy analysis for business students
Being a Business Student the importance of Policy analysis is to understand the Inflation Indexed bonds as it is a unique asset class and it is one of the few that offers a nearly perfect (direct) hedge against inflation, while also having a low correlation to other risk assets. Inflation protection is one of the central goals of strategic asset allocation, and not only since the beginning of the hyper-expansive monetary policy witnessed during the financial crisis of the past five years. Given the current indebtedness of many governments because of the global financial crisis and rising inflation, it is necessary to study the inflation-linked government bonds in order to remove the uncertainty of future inflation rate. Also it is important to analyze the opinion of the academic community towards policy framework and understand the perspective and vision of implication of policy, to focus and highlight the recommendations and suggestions based on the policy framework, implications, and functioning keeping in mind each and every section which may have positive or negative impact of the policy.
Rationale for selecting the project (policy)
Traditionally, in uncertain times, gold was considered the safest investment option - a liquid asset which promised better returns than most instruments. As India's policies started faltering, investors started flocking to gold. This gold rush has added to India's already increasing current account deficit (CAD). That has had a snowballing effect, which has exposed India's weak macro fundamentals.
Now, to accustom Indians away from investing in gold and to restore investor confidence, the government has introduced inflation-indexed bonds.
The rationale behind selecting the Inflation Indexed Bonds for the project study is that as…...

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