former

muffin09 Wrote:
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> Text info...
>
> CFAI Text (pg 44-45): "...a minimum immunization
> risk approach should be as good as cash flow
> matching and likely will be better, because an
> immunization strategy would require less money to
> fund liabilities" Two reasons given: CF matching
> requires conservative return assumption for ST
> cash, second, funds from cash flow matched must be
> available when each liability due.
>
> "Most cases cash flow matching will be technically
> inferior to immunization"
>
> Yet in the answers: Cash flow matching has less
> risk of not satisfying future liabilities,
> multiple liability costs less.
>
> I understand how multi costs less, but why is CF
> matching less risky? Its never explicity said in
> the text from what I can see.
>
> Any help?

Thanks for this. It's this sentence that creates the confusion: "Most cases cash flow matching will be technically inferior to immunization".