The Practical Application of Bond Portfolio Immunization to Investors Is

question 28

Multiple Choice

The practical application of bond portfolio immunization to investors is that immunization

• A) allows aggressive traders to eliminate the price effects caused by interest rate changes.
• B) allows investors to derive a specified rate of return from bond investments for a given investment horizon.
• C) eliminates the possibility of losing money due to a company defaulting on its bond payments.
• D) allows investors to passively manage their bond portfolio once it is initially immunized.

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Definitions:

Foreign Trade

The exchange of goods, services, and capital across international borders or territories.

Overvalued Currencies

Currencies whose market value is higher than their intrinsic or economic value, often leading to economic imbalances.

Foreign Debts

Obligations owed by a country to foreign creditors, often in the form of loans or bonds, which must be repaid in the currency in which they were issued.

Domestic Manufacturing

The production of goods within a country's borders, emphasizing the role of local industries and labor.