Bond Valuation: Interest Rate Risk, Price Risk and Reinvestment Risk

In this video, I explain the concepts of interest rate risk, price risk and reinvestment risk as they relate to bond investments. Students will understand how price risk and reinvestment risk of a bond depend on its time to maturity and its coupon payments. This will also help them understand more advance bond valuation concepts like Duration. Finally, students will also learn why it generally makes sense for investors to match their investment horizon with the time to maturity (or Duration) of bonds.
Students will particularly find this video useful in understanding parts of Chapter 8 (Interest Rates and Bond Valuation) of Corporate Finance (13th Edition) by Ross, Westerfield, Jaffe and Jordan.