Interest rates are typically lower on short-term bonds than on long-term bonds because investors demand higher returns for locking in their money for a longer period, which carries more risk, including the risk of inflation and changes in interest rates over time.

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Interests Rates

Question 119

Multiple Choice

Interests rates

A) are usually higher on short-term bonds than on long-term bonds.
B) for short-term bonds tend to rise when interest rates for long-term bonds fall.
C) for short-term bonds tend to fall when interest rates for long-term bonds rise.
D) are usually lower on short-term bonds than on long-term bonds.
E) are usually higher on low-risk bonds and lower on high-risk bonds.

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