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Which of the following bond would have the least reinvestment risk? ____ A)        An 8% coupon,...

Which of the following bond would have the least reinvestment risk?

____

A)        An 8% coupon, 20-year Fannie Mae bond

B)        An 0% coupon, 5-year Treasury STPRIP

C)        An 4% coupon, 30-year GM subordinated debenture

D)        An 6% coupon, 10-year bond issued by TD Financial

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Answer #1

Answer: Option B is correct
Zero coupon bonds will have no reinvestment risk, because there will be no coupon interest amount to be reinvested.

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