Pain Flashcards
1
Q
Contingent immunization steps
A
S1 required FV based on minimum return Rmin and current investment amount S0
S2 assets required to reach S1 based on current return R0.
S3 if S2 < S0 then immunization not needed.
Rate of return has changed to R1, we
S4 determine PV of the acquired bond based on its CFs and R1
S5 determine value needed to reach S1 using R1
If S5 is more than S4 - proceed with immunization.
