Immunizing Net Worth from Interest Rate Risk Using Duration Matching

question 119

True/False

Immunizing net worth from interest rate risk using duration matching requires that the duration match must be realigned periodically as the maturity horizon approaches.

---

Definitions:

Tax Depreciation

The deduction of a fixed asset's costs over its useful life for tax purposes, reducing taxable income.

Book Depreciation

The methodical distribution of a physical asset's expense across its lifespan for the purposes of accounting and taxation.

Tax Rate

Tax rate refers to the percentage at which an individual or corporation is taxed by the government on their income or profits.

Income Tax Payable

The amount of income tax a company or individual owes to the government but has not yet paid at a specific date, found on the balance sheet.