PPT Slide

Difficulties with immunization procedure

1. It is necessary to rebalance or re-immunize the portfolio from time to time since the duration depends on yield.

2.   The immunization method assumes that all yields are equal (not quite realistic to have bonds with different maturities to have the same yield).

3.    When the prevailing interest rate changes, it is unlikely that the yields on all bonds all change by the same amount.

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