Question

which of the following statements is true? Short-term bonds have greater interest rate risk than do long-term bonds. Long-term bonds have greater interest rate risk than do short-term bonds. All bonds have equal interest rate risk. Interest rate risk is highest during periods of high interest rates.

Answer 1

Answer:

Short-term bonds have greater interest rate risk than do long-term bonds.

Explanation:Short-term bonds are bonds whose period before maturing is short,it will mature between one to four years,the shorter the term of the bond the lesser the risk. High risk is expected for long term bonds especially for an inconsistent economy. Most investors are very interested in short term bonds because they usually mature in short term,they can take back their money and reinvest helping to increase their total revenue on the long term.