A Pension Fund Has an Average Duration of Its Liabilities

question 2

Multiple Choice

A pension fund has an average duration of its liabilities equal to 15 years.The fund is looking at 5 year maturity zero coupon bonds and 4% yield perpetuities to immunize its interest rate risk.How much of its portfolio should it allocate to the zero coupon bonds to immunize if there are no other assets funding the plan?

• A) 52%
• B) 48%
• C) 33%
• D) 25%

Explain the effect of conjugation on IR absorption frequency.

Understand the concept of simple linear regression and the relationship between variables.

Learn how to calculate the sum of squares for error in regression analysis.

Identify the different names and interpretations of the residual term in a regression equation.

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Definitions:

Zajonc's Hierarchy

A theory that proposes the sequence of cognitive processes involved in the appraisal of stimuli, emphasizing the primacy of affective responses over cognitive evaluations.

Effects Model

A model or theory in the fields of psychology or communication that describes the potential impacts of media and messages on individuals or societies.

ABC Model

A framework in cognitive behavioral therapy (CBT) that describes the relationship between an event (Activating event), beliefs (Beliefs), and consequences (Consequences).

Attitude Components

The cognitive, affective, and behavioral aspects of an attitude that respectively represent beliefs, feelings, and intentions towards an object or issue.