'Long- Term' Used to Mean Anything Over Three Years, but Now

question 7

True/False

'Long- term' used to mean anything over three years, but now it means anything over one year.

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Definitions:

Premium

An amount paid for an insurance policy, or the cost above the nominal or face value of a financial instrument.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which is the value written on the face of the security.

Interest Rate Risk

The risk that an investment's value will change due to a change in the absolute level of interest rates.

Reinvestment Risk

The risk of having to reinvest income or principal at a lower interest rate in a fluctuating interest rate environment.