Duration Matching Immunizes a Portfolio Against

question 11

Multiple Choice

Duration matching immunizes a portfolio against

• A) Any parallel shift in the yield curve
• B) All shifts in the yield curve
• C) Changes in the steepness of the yield curve
• D) Small parallel shifts in the yield curve

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Definitions:

Weekly Demand

The total quantity of goods or services that consumers wish to purchase within a week, often used for inventory and production planning.

Holding Cost

The costs related to keeping inventory that hasn't been sold, covering storage fees, insurance, and losses due to items going bad.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Economic Order Quantity

A calculation used to determine the optimal order quantity that minimizes the total inventory costs, including holding and ordering costs.