Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
The phenomenon that rising interest rates on bonds mean that the investor will earn more interest over the same amount of time, and is therefore more likely to reinvest in bonds to earn even more. Likewise, falling interest rates mean that the investor will earn less in coupons and he/she will be less inclined to reinvest in bonds.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved