Weaknesses of the Duration Gap Immunization Model Include All but Which

question 30

Multiple Choice

Weaknesses of the duration gap immunization model include all but which of the following?

• A)Continuously matching the duration of assets and liabilities can be time-consuming and costly.
• B)Duration-based predictions are always incorrect due to convexity.
• C)Duration measurement and management are more complex than the repricing model.
• D)Duration-based immunization strategies require continuous rebalancing of asset and liability durations.
• E)Duration measures only how cash flows change,not the present value of those changes.

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Definitions:

Dosage Interval

The time between doses of a medication, critical for maintaining the therapeutic level of the drug in the bloodstream.

Drug Half-life

The drug half-life is the time required for the concentration of a drug in the body to be reduced by half, reflecting the drug's duration of action.

Drug Potency

A measure of drug activity expressed in terms of the amount required to produce an effect of given intensity.

Maximum Level

The highest allowable or achievable level within a specified context.