Interest rates earned on short-term investments are generally lower than interest rates earned on longer-term investments.

Question

Quizplus · Accepted Answer

This is generally true because longer-term investments carry more risk and uncertainty, so they offer higher interest rates to compensate investors for that risk. Short-term investments, on the other hand, are typically safer and more liquid, so they offer lower interest rates.

Interest Rates Earned on Short-Term Investments Are Generally Lower Than