Question

the additional incentive that the purchaser of a treasury security requires to buy a long-term security rather than a short-term security is called the

Answer 1

The term premium is characterized as the remuneration that financial backers expect for bearing the gamble that loan fees might change over the existence of the bond.

The term premium must be estimated, typically based on financial and macroeconomic variables, as it cannot be observed directly.

Which long-term securities are risk-free from default?

Because they are guaranteed by the United States government, Treasury bonds, notes, and bills carry no default risk.If held until maturity, investors will receive the bond's face value.However, the difference between the purchase price and sale price of the Treasury may result in a gain or loss if it is sold prior to maturity.

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