does prepayment risk also include reinvestment risk? security, 2010, include

Jupiter

If a security has prepayment risk, does it also mean that it has reinvestment risk?



Edited 1 time(s). Last edit at Wednesday, April 14, 2010 at 11:32PM by jonly.

siavosh

Yes, because if you receive a payment earlier than the specified date, then you run a risk of not being able to invest this amount at the rate you wish to (if the market interest rate declines in that time).