Tuesday, March 11, 2008

Reinvestment Risk

i. identify the factors that affect the reinvestment risk of a security and explain why prepayable amortizing securities expose investors to greater reinvestment risk
than nonamortizing securities;

Reinvestment risk is the risk that the proceeds from the payment of principal and interest, which have to be reinvested at a lower rate than the original investment.

http://www.investopedia.com/study-guide/cfa-exam/level-1/fixed-income/cfa10.asp

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