Which one of the following statements is correct?

Question

Quizplus · Accepted Answer

Long-term interest rates are more stable and less volatile compared to short-term interest rates. This is because long-term rates are affected by macroeconomic factors such as inflation and economic growth, which are more stable compared to short-term economic factors such as supply and demand for money. Therefore, most lenders prefer to lend for longer durations at lower rates, thereby making long-term interest rates less volatile. The other options are incorrect as they do not reflect the general financial principles.

Which One of the Following Statements Is Correct