When the risk that interest-rate changes will affect the total dollar return from a security portfolio is reduced to zero, this is referred to as:
A) Hedging
B) Portfolio immunization
C) Duration
D) Zero price elasticity
E) None of the above

Question

Quizplus · Accepted Answer

Portfolio immunization is a strategy designed to minimize the risk of interest-rate changes affecting the value of a portfolio by ensuring that the duration of the portfolio's assets and liabilities are matched. This strategy aims to protect the portfolio against the impact of interest rate fluctuations, effectively reducing the risk to zero.

When the Risk That Interest-Rate Changes Will Affect the Total