“Choo is responsible for managing the funding liabilities for a new wing at the local hospital, which is currently fully funded utilizing a standard immunization approach with non-callable bonds. However, he is concerned about the various risks associated with liabilities, including interest rate risk, contingent claim risk, and cap risk.” Why are contingent claim and cap risks present for a portfolio of fixed rate, non-callable bonds?
^bump… anyone?!
are you mpr44? If so your question had been asked and answered a few months ago… search with “interest rate risk, contingent claim risk, and cap risk” …