Horizon Matching Is a Combination of

question 18

Multiple Choice

Horizon matching is a combination of

• A) Immunization and valuation.
• B) Cash matching and immunization.
• C) Valuation and cash matching.
• D) All of the above.
• E) None of the above.

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Definitions:

IRR

The Internal Rate of Return (IRR) is a financial metric used to estimate the profitability of potential investments by calculating the interest rate at which the net present value of costs (cash outflows) of the investments equals the net present value of the benefits (cash inflows).

Internal Rate of Return

The specific interest rate at which the sum of all cash flows from a project equals a net present value of zero.

Net Present Value

An assessment that measures the current value of a dollar against its future value, considering the effects of inflation and returns.

Market Rates

The prevailing interest rates available in the marketplace for loans and deposits, set by the dynamics of supply and demand.