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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
25. The ability to immunize a bond portfolio is very desirable for bond portfolio managers in some instances.
a. Discuss the components of interest rate risk—that is, assuming a change in interest rates over time, explain the two risks faced by the holder of a bond.
b. Define immunization and discuss why a bond manager would immunize his or her portfolio.
c. Explain why a duration-matching strategy is a superior technique to a maturity- matching strategy for the minimization of interest rate risk.
d. Explain how contingent immunization, another bond portfolio management tech- nique, differs from conventional immunization. Discuss why a bond portfolio man- ager would engage in contingent immunization.
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