Longer the maturity of a Treasury security, the smaller the interest rate risk.

Question

Quizplus · Accepted Answer

The statement is false. The longer the maturity of a Treasury security, the greater the interest rate risk. This is because longer-term securities are exposed to changes in interest rates over a longer period of time, which can result in significant changes to their market value. Shorter-term securities, on the other hand, are exposed to interest rate risk for a shorter period of time and are generally considered to be less risky.

Longer the Maturity of a Treasury Security, the Smaller the Interest