The current market interest rate declines from 10 percent to 8 percent. Due to interest rate reinvestment risk, the bondholders will:
A) receive a lower market value for the bond.
B) receive a higher principal at the maturity of the bond.
C) call back the bond before its maturity.
D) earn a lower return on the reinvested cash flows.
E) receive a lower coupon interest than mentioned in the bond indenture.
Correct Answer:
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