The market rate for bonds is generally higher when the time period to maturity is longer due to the risk of adverse events occurring over the time period.

Question

Quizplus · Accepted Answer

The longer the time period to maturity, the more uncertainty there is about future economic and political conditions, which increases the risk for investors. Therefore, to compensate for this risk, the market rate for longer-term bonds is generally higher than the rate for shorter-term bonds.

The Market Rate for Bonds Is Generally Higher When the Time