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 a longer time period.

Question

Quizplus · Accepted Answer

This is because the longer the time period, the greater the uncertainty and potential risk of changes in interest rates, inflation, and other economic factors. Therefore, investors demand a higher rate of return (yield) to compensate for these risks over a longer holding period.

The Market Rate for Bonds Is Generally Higher When the Time