The maturity risk premium is the added return expected by lenders because of the expectation of inflation.

Name: The maturity risk premium is the added return expected by lenders because of the expectation of inflation.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The maturity risk premium is the added return expected by lenders because of the increased risk associated with lending money for a longer period of time, not because of the expectation of inflation. The inflation premium is a separate component of the required return.

The Maturity Risk Premium Is the Added Return Expected by Lenders