I think the use of language here is rediculous. They call key rate duration ‘functional duration’ which I’d never come across and so got it wrong. However the question I have is, is answer A:
‘decreasing the dispersion of cash flows around the horizon date’
correct? I think they key here is which one BEST addresses it, but just want to check my understanding of part A) is correct.
Thanks
My answer was A as well. but Smith’s main concern was non parallel shifts. the exam says ‘functional duration’ to refer to rate key rate duration. i think if they used key rate duration i would have chosen B.
key rate duration= functional duration = multi functional duration.
this. i got it right. it was obvious, not tricky.
Yeah. Straightforward comparison of immunization vs. contingent immunization.