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How Reinvestment risk will be avoided by investing in debt through mutual fund?


2 Answer(s)


1

Reinvestment risk is - a risk that an investment in a bond, will be paid off early and that the money earned may not be able to be reinvested in a security with a comparable return.

In a debt mutual fund, since the portfolio manager will reinvest the money in other comparable bonds in the portfolio and avoid the reinvestment risk.

0

see because in mutual fund case the portfolio manager is present to reinvest the money in other bonds therefore it avoid invtt risk

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