Short-term bonds are subject to ________ risk because proceeds must be put into some future asset at an unknown interest rate.
A)reinvestment
B)term
C)liquidity
D)default

Question

Quizplus · Accepted Answer

Reinvestment risk is the risk that an investor will be forced to reinvest the proceeds from a matured investment at a lower interest rate. This risk is particularly relevant for short-term bonds, as the proceeds must be reinvested at a future time when the interest rate is unknown.

Short-Term Bonds Are Subject to ________ Risk Because Proceeds Must