The purpose of dedication, immunization, and contingent immunization is to achieve what?

The focus of dedication, immunization, and contingent immunization strategies is primarily to manage a bond portfolio in a way that aligns with specific liabilities. These techniques are used in the context of managing fixed income investments to ensure that the cash flows from the bonds will meet predetermined obligations, such as pension benefits, when they come due.

Dedication involves matching the cash flows of bond investments directly with the timing and amount of future liabilities. This ensures that the funds needed to meet these obligations are available when required. Immunization is a strategy designed to protect a bond portfolio from interest rate risk, securing the portfolio's value against changes in interest rates so that it can meet the liabilities as they arise. Contingent immunization allows for flexibility; if the portfolio value exceeds a certain threshold, the manager may take more risk, but if it falls below the threshold, the strategy reverts to a more conservative immunization approach.

While maximizing long-term capital gains and investing exclusively in mutual funds are valid investment strategies, they do not specifically address the critical objective of aligning a bond portfolio with certain liabilities, which is the essence of the correct choice. Similarly, minimizing volatility in growth stocks falls outside the scope of bond portfolio management altogether. Therefore, the correct answer emphasizes the targeted