Holding other factors such as risk constant, the relationship between the maturity and the annualized yield of debt securities is called the
A) term structure of interest rates.
B) default structure of interest rates.
C) liquidity structure of interest rates.
D) tax structure of interest rates.
E) none of the above

Question

Quizplus · Accepted Answer

The relationship between the maturity and the annualized yield of debt securities is called the term structure of interest rates. It shows how the yield curve changes over time, with longer-maturity debt typically having higher yields to compensate investors for greater risk and inflation uncertainty. The default structure of interest rates refers to the difference in yield between debt securities with different credit ratings or default risk, while the liquidity structure of interest rates refers to the difference in yield between debt securities that are easy to trade and those that are harder to sell. The tax structure of interest rates refers to how taxes affect the after-tax yields for different types of debt securities.

Holding Other Factors Such as Risk Constant, the Relationship Between