Because short-term interest rates are much more volatile than long-term rates True or false

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Business

Anahi

2 March, 16:14

Because short-term interest rates are much more volatile than long-term rates True or false

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Ryann Manning · Answer 1

True

Explanation:

If we review the interest rates of US securities we can determine that the interest rates of Treasury Bills, with maturity date of less than a year, are much more volatile than the interest rate of Treasury Bonds with maturity dates of 20 or 30 years.

However, the interest rates of T-bills are lower than those of T-bonds even though they are much more volatile and therefore should have a higher risk.