1. Duration matching of assets against liabilities is a strategy to minimise the risk of the value of assets and liabilities moving in different directions due to unexpected changes in interest rates. It usually requires adjusting the portfolios of assets and liabilities over time because:

A as time passes maturities and interest rates change which can affect durations of assets and liabilities very differently.

B durations of assets and liabilities fall at the same rate.

C xxx

D it requires you to match the duration of an asset portfolio that matches an index.

E None of the options listed.

F there is likely to be a gap between the values of assets and liabilities in most portfolios.there is likely to be a gap between the values of assets and liabilities in most portfolios.