Immunization Through Duration Matching of Assets and Liabilities May Be

question 21

Multiple Choice

Immunization through duration matching of assets and liabilities may be ineffective or inappropriate because

• A)conventional duration strategies assume a flat yield curve.
• B)duration matching can only immunize portfolios from parallel shifts in the yield curve.
• C)immunization only protects the nominal value of terminal liabilities and does not allow for inflation adjustment.
• D)conventional duration strategies assume a flat yield curve and immunization only protects the nominal value of terminal liabilities and does not allow for inflation adjustment.
• E)All of the options are true.

---

Definitions:

Indirect Manufacturing Cost

Costs related to the production process that are not directly traceable to specific products, such as maintenance, supervision, and utility expenses.

Net Operating Income

The profit generated from a company's normal business operations after subtracting operating expenses from operating revenue.

Product Costs

Costs that are incurred to create a product that includes direct materials, direct labor, and manufacturing overhead.

Period Costs

Expenses that are not directly tied to the production process and are expensed in the period they are incurred.