The difference between the required yield on long and short-term securities of the same characteristics except maturity is called the?

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12-09-2022
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The difference between the required yield on long and short-term securities of the same characteristics except maturity is called the?

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Baraka1 Baraka1 · Answer 1 · 2022-09-21T16:30:08+02:00

The difference between the required yield on long and short-term securities of the same characteristics except maturity is called the maturity premium

Maturity premium (also known as maturity risk premium (MRP)) is an aspect of required return that accounts for an investment's additional interest rate risk and reinvestment risk as a result of a longer time to maturity. The maturity risk premium rises as the time to maturity rises. It can be calculated by comparing securities that are identical except for their time to maturity.

A longer maturity investment also has a higher reinvestment risk, which is the risk that the cash flows obtained over the entire life of an investment will not be reinvested at a sufficient rate.

To learn more about maturity premium: brainly.com/question/16099006

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