Q13.5 The solution seems wrong. I think that horizon matching which ensures that assets and liabilities have the same present values and durations is multple liabilities immunization. But the solution said it is multi-cash flow immunization. Q15.6 Break even analysis with exchange rate involved. I don’t get it in the vignette and its solution. Can anyone clarify ? TKVM !
I believe horizon matching should be a mix of cash flow matching and immunization. Where in the short term you cash flow match, and in the long term you use immunization. So when he describes it as matching durations of assets and liabilities, this is incorrect.
also if it helps, i believe horizon matching is also referred to as combination matching in the text, and the 2 are interchangeable.
CFAdreams, Q13.5 Yes, horizon matching (combination matching) should be a mix of cash flow matching and immunization. But I think ensuring that assets and liabilities have the same present values and durations shall be multple liabilities immunization and the answer to this Q shall be A. Am I wrong ? Q15.6 ?
Can I find the term “multi-cash flow immunization” in CFAI’s text ?