Asked by Elyssa Arcibal on Jul 05, 2024
Verified
Cash flow matching on a multiperiod basis is referred to as
A) immunization.
B) contingent immunization.
C) dedication.
D) duration matching.
E) rebalancing.
Cash Flow Matching
A form of immunization, matching cash flows from a bond portfolio with those of an obligation.
Immunization
A strategy in fixed income investing that aims to make a portfolio's duration and interest rate risk match its liability obligations.
Duration Matching
An investment strategy where the durations of assets and liabilities are aligned to reduce the risk of changes in interest rates affecting the net worth.
- Understand the principle of immunization and its role in managing bond portfolios.
- Acquire knowledge on how to calculate and apply duration in the context of bond portfolio immunization and liability alignment.
Verified Answer
Learning Objectives
- Understand the principle of immunization and its role in managing bond portfolios.
- Acquire knowledge on how to calculate and apply duration in the context of bond portfolio immunization and liability alignment.
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