Sign up  |  Log in

Liability driven investing

I have a very basic question. Liability driven investing. If for instance, a corporate has raised $100 (for simplicity) at 6% for a year, it needs to pay back $106 after a year no matter what the prevailing rates are then. So if the liability (amt) is fixed, how would the term structure affect it? (Yes u may report the market value of debt on balance sheet, but that wouldn’t change the amount owed (106)). And do why would one have to bother about immunization, if the fluctuations are going to be just notional gains/losses? 

With exam day right around the corner, Schweser's Final Review products are designed to help you finish out your study plan and walk into the testing center feeling prepared and confident.

Okay I think I get it. We are just hedging notional possible losses. 

On a different note, what gets you an AF karma?

Jolie wrote:
On a different note, what gets you an AF karma?

Someone upvotes a post of yours.

Such as happened above.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams

Haha thanks