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In the context of fixed-income portfolio management, the portfolio manager is evaluating various techniques used for risk measurement, including principal mapping, duration mapping, and cash-flow mapping. With this in mind, which of the following options accurately represents the mechanics and outcomes associated with these risk measurement techniques?
A
Cash-flow mapping groups cash flows into buckets based on their size.
B
Cash-flow mapping uses the average rates in each risk group as a discount factor.
C
Principal mapping incorporates correlations among zero-coupon bonds.
D
Duration mapping replaces the portfolio with a zero-coupon bond with maturity equal to the duration of the portfolio.