• The reinvestment rate is the return that an investor expects to receive after reinvesting cash flows received from previous investments.

  • The reinvestment rate is expressed as a percentage and represents the amount of interest that can be received on investments with a fixed income.
  • Reinvestment rates can be adversely affected by interest rate risk, which is the possibility of investment losses as a result of changes in interest rates.
  • Reinvestment rates can also be affected by reinvestment risk, which is the potential for an investor to be unable to reinvest cash flows at a rate comparable to their current rate of return.