In Question 25, Money Duration of Portfolio 2 is less than the outflowing portfolio. Still they chose Portfolio 2. Why? From Convexity point of view, chosing Portfolio 2 was justified because in case of immunising multiple liabilities, convexity of asset should just be greater than convexity of liability. But, if we see Money Duration of Asset and Liab. then it’s not getting matched.
When u r I’m cfa level 3, u need a sense of maturity…and not class wise decimal fighting…hope u remember what I am saying as u have takem live classes in kolkatta…
The rule is that monet durations should approximately match…on a level of 2600000, a difference of 300 is hardly a difference…the second condition is that convexity of the asset portfolio should be higher…higher means higher…