Question

In long term costs will become more volatile “- explain ​

Answer 1

Answer:

The power of compounding!

For a simple, hypothetical example, think about two zero-coupon notes. If both a 2-year note and a 10-year one are yielding 3%, the price of the 2-year one would be worth 6.09% more than what you paid for come maturity (1.03^2 - 1), but the 10-year one would be worth 34.39% more than what you paid for (1.03^10 - 1).