jannine

Write a short note on Immunization.

Hi all! In a class group discussion I was asked to describe the major function and explanation of the immunization topic. Kindly provide the explanation.
Add a comment
0%

6 replies

kaijiang
"The immunization technique attempts to derive a specified rate of return during a given investment horizon regardless of what happens to market interest rates. Conditions for Immunizations: 1. The Present value of the liabilities should be equal to present value of assets 2. Duration of assets should be equal to duration of liabilities 3. Convexity of assets in the portfolio should be greater than the convexity of liabilities Immunization Strategies: 1. Components of Interest Rate Risk: Price Risk, Coupon Reinvestment Risk 2. Immunization is neither a simple nor a passive strategy. An immunized portfolio requires frequent re-balancing because the modified duration of the portfolio always should be equal to the remaining time horizon (except in the case of the zero-coupon bond). Source: http://in.docsity.com/en-docs/Bond_Portfolio_Management_Strategies_-_Security_Analysis_and_Portfolio_Management_-_Solved_Quiz_"
Add a comment
ashalata
"Immunisation, or maybe immunization, is the procedure by which an individual's body's defence mechanism gets prepared towards a representative (referred to as immunizing agent). "
Add a comment