SIE Exam Question 239: Answer and Explanation

Question: 239

Reinvestment risk is least present in:

• A. 4% 10-year AAA rated Corporate debenture
• B. Zero coupon Treasury Bond
• C. 2% 10-year Treasury Note
• D. 3% 10-year AA rated Municipal G.O.

Correct Answer: B

Explanation:

B: Since with a Zero coupon instrument there is no annual income to 'reinvest,' Zeroes have no reinvestment risk.