A) income risk
B) investment risk
C) reinvestment risk
D) mature risk
✅ ANSWER: C
Risk of fall in income due to fall in interest rates in future is classified as reinvestment risk. Reinvestment risk is the probability that an investor will be unable to reinvest cash flows (e.g., coupon payments) at a rate comparable to the current investment’s rate of return.
Risk of fall in income due to fall in interest rates in future is classified as reinvestment risk. Reinvestment risk is the probability that an investor will be unable to reinvest cash flows (e.g., coupon payments) at a rate comparable to the current investment’s rate of return.