Question

All of the following securities are subject to reinvestment risk EXCEPT:(A)Municipal Bonds maturing in one year(B)Non-callable Corporate Coupon Bonds(C)Callable U.S. Treasury Bonds(D)U.S. Treasury Bills

Answer 1

Answer:

(D)U.S. Treasury Bills

Explanation:

T-Bills do not have a reinvestment risk because they cannot be reinvested. They are short-term investment options (usually a year), that do not have regular interest payments like a bond, and whose gain for the investor lies in the value that is paid when the t-bill reaches maturity.