Cash flow matching on a multiperiod basis is referred to as a
A) immunization
B) contingent immunization
C) dedication
D) duration matching
E) rebalancing

Question

Quizplus · Accepted Answer

Cash flow matching on a multiperiod basis is referred to as dedication. Immunization refers to matching the duration of assets and liabilities to hedge against interest rate risk. Contingent immunization involves monitoring the portfolio for deviations from the immunization target and taking action if necessary. Duration matching refers to matching the duration of an asset to the duration of a liability. Rebalancing involves adjusting the portfolio to maintain a desired asset allocation.

Cash Flow Matching on a Multiperiod Basis Is Referred to as a