The fact that a bond's interest payments may be invested at a rate that is less than the bond's yield-to-maturity is ________ risk.

Question

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Reinvestment risk refers to the risk that interest payments received from a bond cannot be reinvested at the same rate as the bond's yield-to-maturity. This risk is particularly relevant for investors who plan to reinvest the interest payments instead of spending them. The other options do not relate to this particular risk. Maturity risk refers to the risk that bond prices may change as interest rates change. Immunization refers to the process of creating a portfolio of assets that can match a specific liability stream, thereby immunizing a portfolio from interest rate changes. Price risk refers to the risk that the price of a bond may decline due to changing interest rates. Market risk refers to the risk of losses due to overall market movements.

The Fact That a Bond's Interest Payments May Be Invested