Perfect matching of the maturities of the assets and liabilities will always achieve perfect immunization for the equity holders of an FI against interest rate risk.

Question

Quizplus · Accepted Answer

Perfect matching of maturities of assets and liabilities (duration matching) can reduce interest rate risk but does not guarantee perfect immunization for equity holders due to other factors like changes in spreads, optionality, and non-parallel shifts in the yield curve.

Perfect Matching of the Maturities of the Assets and Liabilities