Why is it said that zero-coupon bonds lock in the reinvestment rate?

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Fundamentals of Investment Management

ISBN: 978-0078034626

10th edition

Authors: Geoffrey Hirt, Stanley Block

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Question Posted: Sep 21, 2015 05:43 AM

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Is the locked-in reinvestment assumption valid for zero-coupon bonds if they are sold before maturity? Explain.
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Why is it said that zero-coupon bonds lock in the reinvestment rate?

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Zerocoupon bonds lock in the reinvestment rate because there is no interest during the ...View the full answer

Fundamentals of Investment Management

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