The Selection of Levels of Activity to Depict a Flexible

question 70

Multiple Choice

The selection of levels of activity to depict a flexible budget
1. will be within the relevant range.
2. is largely a matter of expediency.
3. is governed by generally accepted accounting principles.

• A) 1
• B) 2
• C) 3
• D) 1 and 2

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Definitions:

Cash Flow Matching

A form of immunization, matching cash flows from a bond portfolio with those of an obligation.

Immunization

A strategy in fixed income investing that aims to make a portfolio's duration and interest rate risk match its liability obligations.

Duration Matching

An investment strategy where the durations of assets and liabilities are aligned to reduce the risk of changes in interest rates affecting the net worth.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, frequently used to assess interest rate risk.