________ bonds tend to have lower interest rates than ________ bonds.

Question

Quizplus · Accepted Answer

Shorter-maturity bonds tend to have lower interest rates than longer-maturity bonds. This is because investors are willing to accept a lower interest rate in exchange for the safety and certainty of receiving their money back sooner. In contrast, longer-maturity bonds are riskier because there is a greater chance of interest rate fluctuations and inflation eroding the value of their returns over time. Therefore, investors demand higher interest rates as compensation for taking on this additional risk.

________ Bonds Tend to Have Lower Interest Rates Than ________

Bonds Tend to Have Lower Interest Rates Than