Reinvestment risk, Financial Management

Reinvestment risk is the risk involved in reinvesting the proceeds received from the issuer against callable bonds. During falling interest rate periods, investor cannot reinvest at the same interest rates at which the earlier incomes were reinvested. In these situations, zero-coupon bonds are at an advantageous position as far as investors are concerned as the issuer reinvests the incomes. Higher the coupon on the bond, higher will be the reinvestment risk since the investors may go in for speculative investments.

Posted Date: 9/10/2012 1:17:52 AM | Location : United States







Related Discussions:- Reinvestment risk, Assignment Help, Ask Question on Reinvestment risk, Get Answer, Expert's Help, Reinvestment risk Discussions

Write discussion on Reinvestment risk
Your posts are moderated
Related Questions
Cash Flow Statement Ratios: This ratio, which is defined as a percentage, compares a company's operating cash flow to its total sales or revenues, which provide investors an i

Goral is required to pay five equal annual payments of Rs. 10,000 each in his deposit account that pays 10% interest per year. Find out the future value of annuity at the end of fi

What is a financial ratio? A financial ratio is a number that denotes the value of one financial variable that is relative to another.  Put much more simply, a financial ratio


a) Definitions of EST and LFT needed in order to explain the differentiation between the terms. The EST of each activity will depend on the LFT of all preceding activities. b) S

How can secondary market organised the exchanges and over the counter markets? Exchanges and over-the-counter (OTC) markets: Secondary markets can be organised by exchanges

Cash management is about managing excess cash also. The response of management must depend on whether the surplus is large and how long it is likely to exist. If the balance is

how to calculate the net present value when there is company tax rate and rate of return assume that lease is for 2 years payable at the begining of the yr, at the end of two yrs t

Explain the concepts of Planning the work Determine scope and objective of the audit (to verify assets, to check adequacy of internal controls etc...). Ensuring appropr

I need a report on the topic Investment of Surplus Cash. Can you please assist me for Investment of Surplus Cash report for about 2000 words?