The longer the time to maturity, the greater the percentage change in a bond's price.

Name: The longer the time to maturity, the greater the percentage change in a bond's price.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This statement is true. A bond's price is more sensitive to changes in interest rates the longer its time to maturity. This means that a small change in interest rates can have a larger impact on the price of a long-term bond than on the price of a short-term bond. This is known as interest rate risk.

The Longer the Time to Maturity, the Greater the Percentage