The answer to 27 is A. But I thought it should be C - since Contingent Claim Risk is not a factor for non-callable bonds. It is mentioned in the passage on page 155 that the immunization approach will use non-callable bonds.
The answer in this thread does not explain as to why a non-callable bond would have Contingent Claim Risk. If anybody has clarity on this, it would be very helpful.
This is what my interpretation: (non-callable) corporate bonds have contingent claim risk since bondholders have contingent claims on the company’s assets at bankruptcy. http://www.analystforum.com/phorums/read.php?13,1147030,1147199#msg-1147199