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  • #16034

    Do long-term bonds pay more than short-term bonds because you only get money after a long time— money that you could need earlier?

    #16035

    Solution

    When an investor purchases a given corporate bond, he or she is actually purchasing a portion of a company’s debt. This debt is issued with specific details regarding periodic coupon payments, the principal amount of the debt and the time period until the bond’s maturity.

    Long-term securities typically offer more return than short-term securities because investors usually prefer to lend money for shorter terms. Hence money lent out for longer terms will have a higher yield.

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