The holding period for a bond at which the coupon reinvestment risk offsets the market price risk is best approximated by:

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Macaulay duration is the measure of a bond's sensitivity to changes in interest rates and the average time to receive payments. The reinvestment risk occurs when coupon payments received cannot be reinvested at the same rate as the bond's yield to maturity. The Macaulay duration takes into account the timing and amount of all cash flows and provides a measure of the time required to recoup the bond's price. Therefore, the holding period for a bond at which the coupon reinvestment risk offsets the market price risk is best approximated by Macaulay duration.

The Holding Period for a Bond at Which the Coupon