Which of the following statements about the term of a bond is correct?
A)Term refers to the various characteristics of a bond, including its interest rate and tax treatment.
B)The term of a bond is determined entirely by its credit risk.
C)The term of a bond is determined entirely by how much sales commission the buyer of the bond pays when he or she purchases the bond.
D)Interest rates on long-term bonds are usually higher than interest rates on short-term bonds.

Question

Quizplus · Accepted Answer

The term of a bond refers to its duration until maturity, and interest rates on long-term bonds are typically higher than on short-term bonds to compensate for the increased risk over a longer period.

Which of the Following Statements About the Term of a Bond