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What security will have more reinvestment rate risk a 5-year zero coupon bond or a perpetuity, why? The 5-year zero coupon bond will have more risk associated with the uncertainty of what the proceed

What security will have more reinvestment rate risk a 5-year zero coupon bond or a perpetuity, why?

   

The 5-year zero coupon bond will have more risk associated with the uncertainty of what the proceeds from this investment will earn in the future after the 5 year zero matures and is invested again in the market.

   

The perpetuity will have more risk associated with the certainty of what the proceeds from this investment will earn in the future.

   

The perpetuity will have more risk associated with the uncertainty of what the proceeds from this investment will earn in the future.

   

The 5-year zero coupon bond will have more risk associated with the changes in the interest rate and the subsequent change in the value of the zero coupon bond.

Aug 30 2020 View more View Less

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