A maturity premium is offered on long-term Treasury bonds due to:
A) the risk of changing interest rates.
B) the risk of default.
C) their unique risk.
D)the uncertainty of their maturity date.

Question

Quizplus · Accepted Answer

A maturity premium is offered on long-term Treasury bonds due to the risk of changing interest rates. Longer-term bonds are more sensitive to interest rate changes, which can lead to greater volatility in their prices. Therefore, investors demand a higher yield to compensate for this added risk.

A Maturity Premium Is Offered on Long-Term Treasury Bonds Due