Immunizing the balance sheet of an fi against interest rate, Financial Management

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Immunizing the balance sheet of an fi against interest rate

1. Investing in a zero-coupon asset with a maturity equal to the desired investment horizon removes interest rate risk from the investment management process.

True

False

2. Immunizing the balance sheet of an FI against interest rate risk requires that the leverage adjusted duration gap (DA-kDL) should be set to zero.

True

False

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Financial Management: Immunizing the balance sheet of an fi against interest rate

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Financial Management: Immunizing the balance sheet of an fi against interest rate

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