Question

What is the typical relationship between time and interest rate?
AShorter time periods usually have no affect on interest rates.
BLonger time period usually equals higher interest rates.
CLonger time periods usually have no affect on interest rates.
DShorter time period usually equals higher interest rates.

Answer 1

B Longer time period usually equals higher interest rates

Answer 2

C) Longer time periods usually have no effect on interest rates is the typical relationship between time and interest rate.

Long term bonds have a larger duration when compared to the short term bonds. So, the things between the bond ends will be carried out for a longer time and the interest rate changes will have a huge impact on the long term bonds than the short term bonds.

Long term bonds involves the money and the exchange of other things for a long duration of duration. So, the time and interest rates will have a significant influence on the long term bonds.