Immunization is the process of measuring bond price sensitivity to interest rate changes.

Question

Quizplus · Accepted Answer

By tying all the investment decisions to a duration period, the portfolio manager can take advantage of these counter forces to ensure a necessary outcome. This strategy is called immunization and is used by insurance companies, pension funds, and other institutional money managers to protect their portfolios against swings in interest rates.

Immunization Is the Process of Measuring Bond Price Sensitivity to Interest