Which one of the following involves creating a portfolio in a manner that minimizes the uncertainty of the portfolio's maturity target date value?

Question

Quizplus · Accepted Answer

Immunization involves matching the duration of the assets in a portfolio with the duration of the liabilities, thereby minimizing the uncertainty of the portfolio's maturity target date value. Reinvestment refers to the process of reinvesting the cash flows generated from an investment, and is not directly related to uncertainty of maturity target date value. Duration and modification are measures of interest rate sensitivity, while call protection is a term used in the context of bond issuance.

Which One of the Following Involves Creating a Portfolio in a Manner