A forecast of bond returns based largely on a prediction of the yield curve at the end of the investment horizon is called a ________.
A) contingent immunization
B) dedication strategy
C) duration analysis
D) horizon analysis

Question

Quizplus · Accepted Answer

A forecast of bond returns based on a prediction of the yield curve at the end of the investment horizon is called horizon analysis. Contingent immunization involves setting up a bond portfolio with an immunization strategy that is contingent on future interest rate movements. Dedication strategy involves matching the cash flows from a bond portfolio with the cash flow requirements of an investor. Duration analysis involves measuring the sensitivity of a bond's price to interest rate changes.

A Forecast of Bond Returns Based Largely on a Prediction