Lower interest rates are generally charged on more risky investments and on securities that have longer maturities.

Question

Quizplus · Accepted Answer

Lower interest rates are typically associated with lower risk and shorter maturities. This is because investors are willing to accept lower returns in exchange for the reduced risk and the ability to access their money sooner. Conversely, higher interest rates are typically associated with higher risk investments and longer maturities. This reflects the increased compensation that investors require in exchange for agreeing to tie up their money for a longer period of time and to accept greater uncertainty about the likelihood of receiving their returns.

Lower Interest Rates Are Generally Charged on More Risky Investments