Reinvestment risk refers to the potential danger or uncertainty that an investor faces when attempting to reinvest cash flows (such as interest income or principal repayments) from an existing investment. This risk arises from the fact that when these cash flows are received, market conditions, interest rates, and investment opportunities may have changed. As a result, the investor may not be able to reinvest the funds at the same rate of return or under similar favorable terms. Reinvestment risk can impact the overall return on an investment portfolio, and investors must carefully consider the prevailing economic conditions and interest rate environment when deciding how to reinvest funds to optimize their returns.

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