Reinvestment risk is the risk that future cash flows – either coupons (the periodic interest payments on the bond) or the final return of principal – will need to be reinvested in lower-yielding securities. Inflation risk is the risk that the yield on a bond will not keep pace with purchasing power (in fact, another name for inflation risk is purchasing power risk). To illustrate, suppose you just won the lottery and now have $500,000. A rise in interest rates could see a fall in bond prices. Price risk and interest rate risk : Bond prices are inversely affected by interest rate movements. Default Rates for Global Corporate Bonds. Reinvestment risk is most common in bond investing, but any investment that generates cash flows exposes the investor to this risk. Reinvestment risk. Impact Bond Affirms Demand for Socially Responsible Investments at Competitive Market Rate . , T