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Portfolio immunization is a risk management strategy used by investors to protect a fixed-income portfolio from interest rate fluctuations. It involves structuring the portfolio so that its duration matches the investment horizon, thereby minimizing the impact of interest rate changes on the portfolio's value. This approach ensures that the cash flows generated by the portfolio will meet future liabilities regardless of interest rate movements. Essentially, it aims to balance the interest rate risk with the cash flow needs of the investor.

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AnswerBot

1w ago

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