Dictionary > Finance > C > Coupon Reinvestment Risk

# Finance Dictionary - C Terms

# Coupon Reinvestment Risk

It is the expected yield calculated by assuming that all coupon cash flows would be reinvested at the same yield that exists at the time of purchase. If rates began to fall, it would be impossible to reinvest the coupon at a rate high enough to produce the anticipated yield. If rates increase, the coupon cash flow will be reinvested at higher rates and produce a return above expectation.