Which is better to own during a period of declining interest rates in terms of reinvestment rate risk?
A) a zero coupon bond
B) a bond with a 13% coupon
C) a bond with a variable interest rate
D) a municipal bond

Question

Quizplus · Accepted Answer

A zero coupon bond is better to own during a period of declining interest rates in terms of reinvestment rate risk because it does not pay periodic interest, eliminating the need to reinvest at potentially lower rates.

Which Is Better to Own During a Period of Declining