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Reinvestment risk When interest rates are declining, investors have to reinvest their interest income and any return of principal, whether scheduled or unscheduled, at lower prevailing rates.

Interest rate risk When interest rates rise, bond prices fall; conversely, when rates decline, bond prices rise. The longer the time to a bond's maturity, the greater its interest rate risk.

Q: What is the difference between interest rate risk and reinvestment rate risk?

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B

The definition of reinvestment assumption is an assumption made concerning the rate of return that can be earned on the cash flows generated by capital budgeting projects. The cash flow can be interest, earnings, dividends, or rent.

The simple answer is that an Interest Rate Swap (IRS) is Over The Counter (OTC) while a Futures Contract is Exchange Traded.

Reducible interest means that one only pays interest on the balance of money owing at the end of the month. Flat rate means that interest is calculated on the original load. Reducible interest rate is approx. equal to twice the flat interest rate.

Interest rate is the amount that is paid over and above the original loan amount. Discount rate is the amount of money that is cut or reduced from the original price.

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B

A real interest rate and a nominal interest rate are quite similar. The only real difference between the two interest rates are that a nominal interest rate include the cost of inflation where as the real interest rate does not.

Coupon rate is something that is paid semiannually. The interest rate is something that starts as soon as a bond is issued.

The definition of reinvestment assumption is an assumption made concerning the rate of return that can be earned on the cash flows generated by capital budgeting projects. The cash flow can be interest, earnings, dividends, or rent.

The simple answer is that an Interest Rate Swap (IRS) is Over The Counter (OTC) while a Futures Contract is Exchange Traded.

Reducible interest means that one only pays interest on the balance of money owing at the end of the month. Flat rate means that interest is calculated on the original load. Reducible interest rate is approx. equal to twice the flat interest rate.

Interest rate is the amount that is paid over and above the original loan amount. Discount rate is the amount of money that is cut or reduced from the original price.

Interest rate is the amount that is paid over and above the original loan amount. Discount rate is the amount of money that is cut or reduced from the original price.

The difference is that rates charged by banks to the public have an additional rate added to the prime rate based on creditworthiness and rating. Poor credit equals a higher interest rate and vice versa.

interest rate shifts, and action of fed

The difference between the coupon rate and the required return of a bond is dependent upon the type of bond. Junk bonds will have the biggest difference between its return and the coupon rate.

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