9-61 Immunization of a portfolio implies that changes in _____ will not affect the value of the portfolio.
A)book value of assets
B)maturity
C)market prices
D)interest rates
E)duration

Question

Quizplus · Accepted Answer

Immunization is a strategy used to protect the value of a portfolio against interest rate fluctuations. It involves matching the duration of the portfolio with the investor's time horizon and ensuring that cash flows from investments will cover future liabilities. Changes in interest rates will not affect the value of the portfolio if this strategy is implemented properly. Therefore, immunization implies that changes in interest rates (choice D) will not affect the value of the portfolio.

9-61 Immunization of a Portfolio Implies That Changes in _____