Long-term bonds have relatively higher interest rates because they carry higher risk due to the longer time period.

Question

Quizplus · Accepted Answer

Long-term bonds are generally riskier than short-term bonds because the longer time period increases the likelihood of changes in interest rates, inflation, and other economic factors that can affect the bond's value. Therefore, in order to compensate investors for the higher risk, long-term bonds typically offer a relatively higher interest rate.

Long-Term Bonds Have Relatively Higher Interest Rates Because They Carry