Longer the maturity, higher is the cost of a bond.

Name: Longer the maturity, higher is the cost of a bond.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This statement is true. Bonds with longer maturity periods are more risky than those with shorter maturity periods as there is a higher chance of the issuer defaulting on the bond over a longer period of time. Therefore, investors demand a higher yield on longer-term bonds, which increases their cost.

Longer the Maturity, Higher Is the Cost of a Bond