Long-term bonds are __________ than short-term bonds, and long-term bonds often have a __________ yield than short-term bonds.
A) less risky; lower
B) more risky; lower
C) less risky; higher
D) more risky; higher

Question

Quizplus · Accepted Answer

Long-term bonds are considered to be more risky because they are more sensitive to changes in interest rates and inflation rates over a long period of time. This means that their prices are more volatile, increasing the risk for investors. However, because of this increased risk, long-term bonds often offer a higher yield than short-term bonds to compensate investors for the additional risk they are taking on.

Long-Term Bonds Are __________ Than Short-Term Bonds, and Long-Term Bonds