Final answer:
Reinvestment risk is the danger of having to reinvest income at a lower interest rate than the original investment. It is one of the risks associated with financial investments that households must consider, alongside expected return and liquidity.
Step-by-step explanation:
Reinvestment risk is d) the risk of reinvesting at a lower rate. This refers to the possibility that an investor will be unable to reinvest cash flows, such as coupon payments from a bond, at a rate comparable to their current rate of return. In financial markets, investment options for households include bank accounts, bonds, stocks, mutual funds, and tangible assets. When evaluating these options, one must consider the expected rate of return, risk, and liquidity. The expected rate of return is the projected income from an investment. Risk includes factors such as default risk, the possibility of the issuer failing to make payments, and interest rate risk, the potential for rising market rates to diminish the value of a fixed-rate investment. Finally, liquidity measures how easily an investment can be converted into cash.