An investor wants to avoid uncertainty of reinvesting periodic interest receipts. Which instrument best suits this objective?

Reinvestment risk is the risk that an investor will not be able to reinvest periodic cash flows (such as coupon payments) at a rate comparable to the current investment's rate of return. Zero-coupon bonds (also known as Z-bonds or deep discount bonds) do not pay periodic interest (coupons). Instead, they are purchased at a discount to their face value and pay the full face value at maturity. Because there are no interim cash flows to reinvest, zero-coupon bonds eliminate reinvestment risk entirely.