Question: (c) Duration matching does not protect against large interest rate changes. Which of the following plots shows how the portfolio value changes with interest rate

(c) Duration matching does not protect against large interest rate changes. Which of the following plots shows how the portfolio value changes with interest rate changes? Why? 1,020 1,010 Portfolio value (S) 1,000 990 Plot 1 Plot 2 Plot 3 Plot 4 980 2 3 6 7 8 5 Interest rate (%)

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