Matching the maturities of assets and liabilities is not a perfect method of immunizing the balance sheet because the timing of the cash flows is likely to differ between the assets and liabilities.

Question

Quizplus · Accepted Answer

Even if the maturities of assets and liabilities are matched, the timing of cash flows may still differ due to prepayments, early withdrawals, early loan repayments or early bond redemption, making immunization imperfect.

Matching the Maturities of Assets and Liabilities Is Not a Perfect