Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Which of the following bond has the highest reinvestment risk?
|
Bond |
Coupon Rate |
Maturity (years) |
|
A |
8% |
10 |
|
B |
6% |
10 |
|
C |
6% |
5 |
|
C |
||
|
A |
||
|
B |
Expert Solution
Step 1: Define=reinvestment risk
Money recieved from the bond in form of coupon payments needs to be reinvested so that is risk of reinvestment.
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