What will happen to the interest on a bond as the bond’s maturity increases? a.
ID: 1226888 • Letter: W
Question
What will happen to the interest on a bond as the bond’s maturity increases?
a.
The bond will pay less interest because it has less risk.
b.
The bond will pay less interest because it has more risk.
c.
The bond will pay more interest because it has more risk.
d.
The bond will pay more interest because it has less risk.
a.
The bond will pay less interest because it has less risk.
b.
The bond will pay less interest because it has more risk.
c.
The bond will pay more interest because it has more risk.
d.
The bond will pay more interest because it has less risk.
Explanation / Answer
c. The bond will pay more interest because it has more risk. Risk is directly proportional to returns