Which of the following best describes the type of relationship between the term to maturity and interest rates in the last 20 years?
A)inverse
B)direct
C)negative
D)There is no consistent relationship.

Question

Quizplus · Accepted Answer

The term to maturity and interest rates have a direct relationship in the last 20 years. This means that as the term to maturity increases, so do the interest rates. This is because the longer the time period of the bond, the greater the risk of inflation and other market factors that can impact the investment. Therefore, investors demand a higher interest rate to compensate for the additional risk.

Which of the Following Best Describes the Type of Relationship