reinvestment risk

Definition

The risk resulting from the fact that interest or dividends earned from an investment may not be able to be reinvested in such a way that they earn the same rate of return as the invested funds that generated them. For example, falling interest rates may prevent bond coupon payments from earning the same rate of return as the original bond.

Use reinvestment risk in a sentence

There was a reinvestment risk and we had to take things in stride and be aware of what was happening.

​ Was this Helpful? YES  NO 4 people found this helpful.

You should always try and figure out how much of a reinvestment risk something is before you try it out.

​ Was this Helpful? YES  NO 10 people found this helpful.

Jason made a lot of money on the stock market and when it was time to reinvest his profits , he decided to weigh the benefits of the REINVESTMENT RISK .

​ Was this Helpful? YES  NO 3 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
duration matching strategy split coupon bond