Because short-term interest rates are much more volatile than long-term rates, you would, in the real world, generally be subject to much more interest rate price risk if you purchased a 30-day bond than if you bought a 30-year bond.

Question

Quizplus · Accepted Answer

Long-term bonds are generally more sensitive to interest rate changes than short-term bonds, meaning that their prices are more volatile in response to interest rate fluctuations. This is because the present value of the bond's future cash flows is more affected by changes in interest rates when those cash flows are further in the future.

Because Short-Term Interest Rates Are Much More Volatile Than Long-Term