rate of return resulting from the reinvestment of the interest from a bond or other investment. The reinvestment rate on a zero coupon fund is predictable and locked in, since no interest payments are ever made, and therefore all imputed interest is reinvested at the same rate. The reinvestment rate on bonds with regular interest payments is less predictable because it rises and falls with market interest rates.
rate of return resulting from the reinvestment of the interest from a bond or other fixed-income security. The reinvestment rate on a zero-coupon bond is predictable and locked in, since no interest payments are ever made, and therefore all imputed interest is reinvested at the same rate. The reinvestment rate on coupon bonds is less predictable because it rises and falls with market interest rates.
the interest rate an investor is assumed to be able to earn on intermediate cash flow in the projection of a terminal value.
