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Reinvestment Return

Income from reinvested coupons at the assumed rate.

Reinvestment return is the additional income earned by reinvesting coupon payments at a given rate until the horizon date. It equals the future value of reinvested coupons minus their face value.

Formula
Reinvest=∑Couponi×(1+r)ti−∑CouponiPinitial\text{Reinvest} = \frac{\sum \text{Coupon}_i \times (1 + r)^{t_i} - \sum \text{Coupon}_i}{P_{\text{initial}}}

Related Terms

Horizon Analysis

Projects bond returns for a holding period shorter than maturity.

Coupon

The bond's stated annual interest rate, applied to face value to determine periodic payments.