The Statement That a Portfolio Is Immunised Using Duration Matching

question 31

Multiple Choice

The statement that a portfolio is immunised using duration matching:

• A)means that the FI is entirely hedged against interest rate risks
• B)is misleading as duration matching is a dynamic process and only hedges the FI against instantaneous interest rate changes
• C)is misleading as duration matching is a dynamic process and only hedges the FI against interest rate changes that occur within a month
• D)None of the listed options are correct.

---

Definitions:

Business Income

This refers to the earnings or revenue generated from the business's operations, after subtracting the costs and expenses associated with producing and selling the business's goods or services.

Customer Service

The assistance and support provided by a company to those people who buy or use its products or services.

Total Independence

A state or condition where an entity operates without any external control or influence.

Franchise

A contractual license to operate an individually owned business as part of a larger chain.