The Principle of Duration Matching Is Not

question 18

Multiple Choice

The principle of duration matching is not

• A)used only in bond portfolio management
• B)a useful concept for investments with target dates
• C)a means matching one's assets to one's objectives
• D)B and C are correct
• E)none of the above

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Definitions:

Required Return

This is the minimum return an investor expects to receive on an investment, factor in the risk involved.

Equity Securities

Financial assets that represent ownership in a corporation, such as stocks, entitling holders to a share of the company's profits and assets.

Future Cash Flows

Estimated amounts of money to be received or paid out in the future, critical for financial analysis and valuation.

Maturity Date

The specified date on a financial instrument at which the principal (and usually interest) is paid and it ceases to exist.