A portfolio is said to be immunized if:
A)the present value of its cash flows equals the its principal value.
B)the duration of the portfolio is equal to its maturity.
C)the present value of its cash flows is greater than its principal value.
D)the duration of the portfolio is equal to the investor's investment horizon.

Question

Quizplus · Accepted Answer

Immunization is achieved when the duration of the portfolio matches the investor's investment horizon, minimizing interest rate risk.

A Portfolio Is Said to Be Immunized If