The Difference Between Reinvestment Risk and Interest-Rate Risk Is

question 42

Multiple Choice

The difference between reinvestment risk and interest-rate risk is

• A) the former involves systematic risk and the latter involves non-systematic risk.
• B) the former involves the effects of interest rate changes over the life of the investment whereas the latter involves changes over the economy in one year.
• C) the former involves the effects of interest rate changes only at the time of reinvestment whereas the latter involves changes over the investor's holding period.
• D) Both have similar effects as interest rates change.

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