Investors are most concerned about reinvestment rate risk wh

Investors are most concerned about reinvestment rate risk when bonds have a long time to maturity. True or False?

Solution

True: Investors are most concerned about reinvestment rate risk when bonds have a long time to maturity.

The reinvestment risk concerns most to the investors because the interest rate can be lower over the period which raises challenge for reinvestment of interest or coupons over the period and Principal at maturity (Interest rate risk is higher for the long term bonds)