Which of the statements below is FALSE?
A)If you invest money for a short period and buy a six-month CD,you will not receive as high an interest rate as if you bought a CD with a longer maturity period.
B)The difference in rates as the borrowing time or investment horizon increases is due to the maturity premium of the investments.
C)The maturity premium represents that portion of the yield that compensates the investor for the additional waiting time or the lender for the additional time it takes to receive repayment in full.
D)The longer the loan,the greater the risk of nonpayment and the lower the interest rate the lender demands.

Question

Quizplus · Accepted Answer

The statement in D is false because typically, the longer the loan period, the higher the interest rate demanded by the lender. This is due to the increased risk of nonpayment over a longer period, which lenders compensate for by charging higher interest rates.

Which of the Statements Below Is FALSE