Which condition would keep the PV of the cash flows of assets equal to or greater than the PV of liabilities?

The condition that would keep the present value (PV) of the cash flows of assets equal to or greater than the PV of liabilities is effective duration management. Effective duration management involves tailoring the duration of asset portfolios to match that of liabilities. Duration is a measure of the sensitivity of the price of an asset or a liability to changes in interest rates. By managing the effective duration, an investor can ensure that the cash flows from the assets are closely aligned with the timing and amount of the liabilities. This alignment helps mitigate interest rate risk and ensures that the assets can cover the liabilities as they come due, which is critical for maintaining the financial health of an organization or portfolio.

In contrast, high interest rates could increase the present value of future cash flows, but they could also negatively impact the liability side if they lead to increased current liabilities, depending on the nature of those liabilities. Low market risk and stable durations could contribute to a more predictable cash flow environment, but they do not directly guarantee that the PV of assets will be greater than or equal to the PV of liabilities. Thus, effective duration management specifically addresses the alignment of cash flows and is essential for risk management in financial planning.