Explain : Reinvestment Risk

Reinvestment risk refers to the possibility that an investor will be unable to reinvest cash flows received from an investment, such as coupon payments or interest, at a rate comparable to their current rate of return. This new rate is called the reinvestment rate.


Zero-coupon bonds (Z-bonds) are the only type of fixed-income security to have no inherent investment risk since they issue no coupon payments throughout their lives.

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