All Courses > Bonds > 100
Bonds 104: Immunization

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Contingent immunization strives to match a portfolio's cash flow to its liabilities.
Choose wisely. There is only one correct answer.
False. This matching is called combination matching.
2.
When interest rates rise, ________.
Choose wisely. There is only one correct answer.
Neither choice is correct. When interest rates rise, a bond's price decreases and its reinvestment rate increases.
3.
Which is not true about bond duration?
Choose wisely. There is only one correct answer.
The shorter a bond's duration, the greater its price volatility. In reality, the longer a bond's duration, the greater its price volatility.
4.
Combination matching can lower the reinvestment risk of a portfolio.
Choose wisely. There is only one correct answer.
True. Combination matching can lower the reinvestment risk of a portfolio.
5.
Immunization protects a bond's price from changing interest rates.
Choose wisely. There is only one correct answer.
True. When a bond portfolio is immunized, it is designed to be "immune" to price changes due to fluctuating interest rates.