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Expected Capital Gains Yield
The anticipated rate of return from an investment due to an increase in its market price.
Reinvestment Rate Risk
Occurs when a short-term debt security must be “rolled over.” If interest rates have fallen, the reinvestment of principal will be at a lower rate, with correspondingly lower interest payments and ending value.
High-Coupon Bonds
Bonds that offer a higher-than-average interest rate (coupon) compared to others in the market, reflecting potentially higher risk.
Low-Coupon Bonds
Low-Coupon Bonds are bonds that have a lower interest rate than the prevailing market interest rate, typically making them sell at a discount to their face value.
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