Long-run bonds tend to be riskier than short-run bonds, so investors require a higher reward for forgoing liquidity for so long.

Question

Quizplus · Accepted Answer

Long-run bonds carry more risk because there is a greater chance of inflation, interest rate changes, and default. As a result, investors require a higher return to compensate for the increased risk and for locking up their money for a longer period of time.

Long-Run Bonds Tend to Be Riskier Than Short-Run Bonds, So