A bond strategy attempting to immunize the portfolio from interest rate risk is based on the strategy of:
A) buying and holding bonds.
B) using horizon analysis.
C) duration matching.
D) indexing the portfolio.

Question

Quizplus · Accepted Answer

Duration matching is a bond strategy used to immunize a portfolio from interest rate risk by aligning the duration of the portfolio's assets with the duration of its liabilities, thereby minimizing the impact of interest rate changes.

A Bond Strategy Attempting to Immunize the Portfolio from Interest