A Portfolio of Bonds Is Immunized from Interest Rate Risk

question 43

True/False

A portfolio of bonds is immunized from interest rate risk if the duration of the portfolio is always equal to the desired investment horizon.

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Definitions:

Discount

A reduction from the usual cost of something, typically given for prompt or advance payment or to a special category of buyers.

Principal

A principal can refer to the main party involved in a financial transaction or the original amount of a debt or investment before interest.

Wrongful Acts

Actions or behaviors that are illegal or immoral, leading to harm or injury against another person or entity.

Agent

An individual or entity authorized to act on behalf of another (the principal) in dealings with third parties.