What Is a Reinvestment Rate?

The reinvestment rate is the interest rate earned on newly invested principal in a fixed income security. The reinvestment rate is important to fixed income investors because it directly impacts the return on their investment. For example, let’s say an investor buys a $1,000 bond with a 5% coupon and a 5% yield to maturity. … Read more

What is a substitute good?

A substitute good is that good (or service) that is capable of satisfying the same need as another good. In that sense, it is the consumer's decision to be able to replace said good with another due to the functions it performs. The difference between choosing one or the other is the characteristics or the … Read more