Because long-term securities face greater risk of capital loss than do short-term securities,investors generally:
A) pay a higher price for long-term securities.
B) require a higher yield on long-term securities.
C) require a lower yield on long-term securities.
D) stay away from long-term securities.

Question

Quizplus · Accepted Answer

Investors generally require a higher yield on long-term securities to compensate for the increased risk of capital loss that comes with a longer holding period.

Because Long-Term Securities Face Greater Risk of Capital Loss Than