Maturity Risk Premium?


A maturity risk premium is essentially the extra amount you can expect to earn on an investment by tying up your money in it for a longer period of time. For instance, the additional revenue you could get from a 10-year bond versus a 1-year bond would have a certain level of maturity risk premium.
Q&A Related to "Maturity Risk Premium?"
The purpose of maturity risk premium (MRP) is to raise the interest rates specifically on long-term bonds as compared to the short-term bonds. Over the years, the maturity risk premium
yield to maturity is 95 makes no sense, should it be 9.5% if so the coupon is 5.872%
The amount of interest, that you add to a bond or other instrument, to compensate for the risk that the person or company cannot or will not pay you back. You evaluate the risk level
Amount above the risk-free rate required to induce average investors to enter the market.
1 Additional Answer Answer for: maturity risk premium
What Is a Maturity Risk Premium?
When you invest in securities that pay you a fixed rate of interest, such as a fixed-rate bond or certificate of deposit, both you and the borrower are stuck with the agreed-upon interest rate for the term of the security. If the market interest rates go... More »
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