The term structure of interest rates is related to the ____ risk premium.
A) default
B) seniority
C) marketability
D) maturity

Question

Quizplus · Accepted Answer

The term structure of interest rates refers to the relationship between interest rates and the time to maturity of debt securities. This relationship is affected by the maturity risk premium, which is the additional return investors require for holding longer-term debt securities that are subject to greater interest rate risk. Therefore, the best choice is D, maturity.

The Term Structure of Interest Rates Is Related to the ____