Question

Why might you want to match bond durations to the target date of your portfolio? A) To immunize it B) To reduce its duration C) To maximize total return D) To reduce interest rate risk

          Why might you want to match bond durations to the target date of your portfolio?
A) To immunize it
B) To reduce its duration
C) To maximize total return
D) To reduce interest rate risk

Added by Daniel A.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

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Solved by Expert Lourence Gonhovi

Step 1

It represents the weighted average time it takes to receive the bond's cash flows, including both coupon payments and the return of principal. Now, why might you want to match bond durations to the target date of your portfolio? A) To immunize it: Immunization Show more…

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Why might you want to match bond durations to the target date of your portfolio? A) To immunize it B) To reduce its duration C) To maximize total return D) To reduce interest rate risk