One form of reinvestment risk is the possibility that the cash flows from an investment might somehow be cancelled or stopped before its stated maturity date.
This could happen if the issuer has the right to redeem (or "call") a fixed income security before its contractual maturity date.
In each case, the lender and the holder of a mortgage-backed security cannot be certain of receiving the expected cash flows from the loan.
[6] As Thau and finance scholar Dr. Frank Fabozzi have observed, securities with a longer term to maturity carry greater reinvestment risk.
[12] For investors who plan to spend, rather than invest, a security's cash flows, reinvestment risk may not be an issue.