The importance of the reinvestment assumption increases with a high coupon and a long term to maturity.
Which security is most subject to reinvestment risk?
- The new rate is known as the reinvestment rate.
- Because they make no coupon payments throughout their lifespan, zero-coupon bonds (Z-bonds) are the only type of fixed-income instrument with no inherent investment risk.
- Reinvestment risk is the possibility that cash flows from an investment would earn less when reinvested in a new venture.
- Non-callable bonds, zero-coupon instruments, and long-term securities can all be used to reduce reinvestment risk.
learn more about reinvestment refer:
https://brainly.com/question/1366132
#SPJ4
