To Immunize Your Portfolio, You Should

question 102

Multiple Choice

To immunize your portfolio, you should:

• A)avoid callable bonds.
• B)match bond maturity dates to your target dates.
• C)match bond durations to your target dates.
• D)purchase only par value bonds.
• E)purchase only high-coupon bonds.

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Definitions:

Margin of Safety

Margin of Safety is the difference between actual sales and the break-even point, indicating the amount of sales decline a company can sustain before incurring a loss.

CVP Income Statement

An income statement format that is used to analyze the impact of varying levels of sales and product costs on operating profit, focusing on the relationships between cost, volume, and profit.

Management Decision-Making

The process by which management identifies, evaluates, and chooses among alternative courses of action to achieve organizational objectives.

Traditional Income Statement

An income statement format that separates costs into categories of cost of goods sold and operating expenses to calculate net income.