To compensate for the uncertainty of future interest rates

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Reference no: EM132063146

1. Because long-term securities face greater risk of capital loss than do short-term securities, investors generally:

1) pay a higher price for long-term securities

2) require a higher yield on long-term securities

3) require a lower yield on long-term securities

4) stay away from long-term securities

2. To compensate for the uncertainty of future interest rates and the greater default risk for longer term loans, the lender generally:

1) charges a higher rate of interest on long-term loans

2) includes a very high number of restrictive debt provisions

3) is entitled to change the terms of the loan at any time

4) is entitled to demand repayment of the loan at any time

Reference no: EM132063146

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