Chartered Financial Analyst Level 1
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All else being equal, which type of bond presents the greatest reinvestment risk?
A
Putable bonds, as they allow bondholders to sell the bond back to the issuer at a predetermined price, reducing reinvestment risk.
B
Callable bonds, as they expose bondholders to higher reinvestment risk if the bonds are called in a lower interest rate environment.
C
Non-callable convertible bonds, as they lack call provisions, resulting in lower reinvestment risk compared to callable bonds.