Investors usually __________, because long-term securities have a greater risk of capital loss than do short-term securities.
A) require a higher yield on long-term securities
B) require a lower yield on long-term securities
C) pay a higher price for long-term securities
D) avoid long-term securities

Question

Quizplus · Accepted Answer

Investors usually require a higher yield on long-term securities because there is a greater risk of capital loss due to factors like inflation, changes in interest rates, and economic uncertainty over a longer time period. Therefore, to compensate for this higher risk, investors demand a higher return on their investment.

Investors Usually __________, Because Long-Term Securities Have a Greater Risk