In Classical Immunization the Effect of a Change in Interest

question 49

Multiple Choice

In classical immunization the effect of a change in interest rates is effectively neutralized because

• A) Price risk and reinvestment risk offset each other.
• B) Price risk and maturity risk offset each other.
• C) Reinvestment risk and credit risk offset each other.
• D) Reinvestment risk and maturity risk offset each other.
• E) None of the above.

---

Definitions:

Poisson Formula

A mathematical formula used to calculate the probability of a given number of events happening in a fixed interval of time or space, assuming events occur with a known constant mean rate and independently of the time since the last event.

Compute

To perform mathematical calculations or process data using a computer or computational algorithm.

Sports Fans

Individuals who exhibit enthusiasm, and often fervent support, for sports teams, athletes, or sporting events.

College Students

Individuals enrolled in an institution of higher education aiming to attain degrees or certificates.