Which of the following statements is true regarding investments in bonds?
A)shorter maturities should return more than longer maturities,in general
B)Treasury bonds should return more than corporate bonds of the same maturity
C)longer maturities should return more than shorter maturities,in general
D)lower-rated issues should return less than higher rated issues at maturity.

Question

Quizplus · Accepted Answer

Longer maturities should return more than shorter maturities, in general, due to the time value of money concept. As investors are tying up their money for a longer period, they should be compensated with a higher return. However, it is important to note that longer-term bonds also carry more interest rate risk.

Which of the Following Statements Is True Regarding Investments in Bonds