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?"
Maturity Risk Premium. The maturity risk premium takes the interest rate risk one step further by increasing the market rate for securities with longer terms to account for the risk
The. risk premium. is the excess return above the. risk-free rate. that investors require as compensation for the higher uncertainty associated with risky assets. The five main risks
outstanding bonds have a $1000 par value and they mature in 5 years. their yield to maturity is 95 based on semiannual compound and the current market price is $853.61. the bonds
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
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 »
Difficulty: Easy
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