The longer the maturity of a bond, the more its price will change in response to a given change in interest rates; this is called interest rate price risk.

Question

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Interest rate price risk is directly related to the length of time until a bond matures. The longer the time until maturity, the more sensitive the bond's price will be to changes in interest rates. This means that a given change in interest rates will have a greater impact on the price of a long-term bond than on a short-term bond. This is why investors must consider interest rate risk when selecting bonds for their portfolios.

The Longer the Maturity of a Bond, the More Its