The risk that the effective yield of an investment may be reduced because of a decline in interest rates during the life of the investment that results in less income being obtained from reinvesting the investment's interest payments. For an investor, it is the risk that interest income or principal repayments will have to be reinvested at lower rates in a declining rate environment. Reinvestment risk applies to fixed-rate callable securities. Because issuers typically call fixed-rate securities when rates are falling, the investors will have to reinvest their returned principal at a lower prevailing rate. This risk is sometimes referred to as call risk.