Assuming that everything else is equal, a U.S. government bond that matures 30 years from now most likely pays alower interest r

Question

notka56 [123]

2 years ago

15

Assuming that everything else is equal, a U.S. government bond that matures 30 years from now most likely pays alower interest r

ate than a U.S. government bond that matures 10 years from now.

SAT

1 answer:

prohojiy [21] · Answer 1 · 2023-09-25T18:48:45+03:00

Assuming that everything else is equal, a U.S. government bond that matures 30 years from now most likely pays a higher interest rate than a U.S. government bond that matures 10 years from now. This is further explained below.

<h3>What is the interest rate?</h3>

Generally, The Federal Reserve raised its benchmark interest rate by 0.75 percentage points on Wednesday, bringing the total to a range of 2.25 percent to 2.5 percent. This is the second straight rise in interest rates by the Federal Reserve. Chair Jerome Powell has indicated that there will come a time when the Fed would begin to pause rises in order to evaluate the effect of those hikes.

In conclusion, When all other factors are considered, a United States government bond with a maturity date that is 30 years in the future will almost certainly pay a greater interest rate than a United States government bond with a maturity date that is 10 years in the future.