How do interest rate risk and reinvestment risk interact?

Answer 1

You keep asking all of these questions. Perhaps you should just book a session. Interest rate risk manifests itself as Principal risk and reinvestment risk.. If you have two bonds with the same maturity and one has a coupon that is twice as high as the other it will trade at a substantial discount. It will have a shorter duration and the price risk will not be as large as the other bond. The value to this bond comes from the high coupons.. The more you rely on coupons for value, the greater your reinvestment risk