A bond strategy attempting to immunize the portfolio from interest rate risk is based on the concept of:
A)buy and hold.
B)horizon.
C)duration.
D)indexing.

Question

Quizplus · Accepted Answer

Immunizing a bond portfolio from interest rate risk involves selecting bonds with durations that match the investor's investment horizon. Duration measures a bond's sensitivity to changes in interest rates and is a key factor in determining the bond's price movement. By investing in bonds with matching durations, the investor can minimize the impact of interest rate movements on the portfolio's value. Buy and hold is a general investment strategy that is not specific to bond investing, while indexing reflects a passive investment style and does not address interest rate risk.

A Bond Strategy Attempting to Immunize the Portfolio from Interest