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Macaulay duration is the optimal holding period to immunize the interest rate risks, namely to make...

Macaulay duration is the optimal holding period to immunize the interest rate risks, namely to make the reinvestment risk and selling price risk offset one another completely. True False

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Expert Solution

Macaulay duration is statistic Which identify the investment horizon so that the gains and losses from coupon reinvestment will be offsetting the gains and losses from the market price changes.

Hence it can be said that it is the optimal holding period to immunize the interest rate risk and make the reinvestment risk and selling price risk offset one another completely.

The given statement is TRUE.

jeff jeffy answered 2 years ago
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