The use of portfolio immunization means that:
A) Investors will get the highest returns possible
B) Investors will get the lowest returns possible
C) Investors earn identical total earnings whether interest rates go up or down
D) Investors receive a higher and more stable return, while not using portfolio immunization normally results in a lower and more volatile return
E) None of the above

Question

Quizplus · Accepted Answer

Portfolio immunization is a strategy to ensure that a portfolio will earn a predetermined return regardless of interest rate changes, thus providing identical total earnings whether rates go up or down.

The Use of Portfolio Immunization Means That