An analyst who selects a particular holding period and predicts the yield curve at the end of that holding period is engaging in
A) a rate anticipation swap.
B) immunization.
C) horizon analysis.
D) an intermarket spread swap.
E) none of these.

Question

Quizplus · Accepted Answer

Horizon analysis involves selecting a specific holding period and predicting the expected returns and risks associated with an investment over that period. This is distinct from rate anticipation swaps, which involve exchanging fixed and floating rate debt to take advantage of anticipated changes in interest rates, immunization which is managing an investment portfolio to match the duration of its liabilities, and intermarket spread swaps which involve taking advantage of pricing differences between related instruments in different markets.

An Analyst Who Selects a Particular Holding Period and Predicts