"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_"
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