can anyone explain it? It’s from SchweserNotes Book 2, Capital Market Expectations.
“The overall gain or loss to the investor will depend on the investment horizon. For an investment horizon that is shorter than the Macaulay duration, the capital gain/loss impact will be more dominant than the reinvestment impact, meaning for example that falling (rising) interest rates will result in a higher (lower) realized return. For an investment horizon longer than the Macaulay duration, the reinvestment risk dominates, meaning that falling (rising) interest rates will result in a lower (higher) realized return.”
P.S. I got my ebooks like 2 months ago. Is it true that Book 2 contains bunch of mistakes?
Thanks a lot!