Q:

What are the benefits of a long-term bond over a short-term bond?a.Long-term bonds have fewer risks than short-term bonds.b.Long-term bonds have more risks associated with them, and bring in lower returns for the initial investment.c.While long-term bonds have more risks associated with them, they have the potential to bring in higher returns for the initial investment. d.Long-term bonds always have a higher return for the investment

Accepted Solution

A:
Answer:The correct answer is option C.Step-by-step explanation:c.  While long-term bonds have more risks associated with them, they have the potential to bring in higher returns for the initial investment. The disadvantage of short-term bonds is that they pay lower interest rates than long-term bonds. Long term bonds have a greater chance of getting higher rates as there is a greater probability that with time, the interest rates increase. Long term bonds are generally those, that people keep for almost 10 years.