Last question in CFAI was from 2006 exam – what LOS covers it?
Its in FI. Horizon matching is when you use cash flow matching for the 1st 5 years and then immunization for the years after that…Correct? It should be in with immunization and CF matching… Did I get that one right? Have done 2006 yet, 75% done with 2004
Yes, first few years you do cash flow matching (higher cost but lower liquidity risk) and then immunization. I think duration of cash flow matching is not necessarily 5.