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Long-term capital securities are high-risk than with short-term securities. Why?

Long-term capital securities are high-risk than with short-term securities. Why?

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Answer : Long Term securities are considered as having higher risk than short term secuities. One of The prime reason is interest rate Risk . Interest rate risk is the risk of fluctuations in Long term securities are more than short term securities . Therefore they are considered as riskier than short term securities . Long term capital securities are very sensitive to interest rate changes. Another reason is that long term securities are of long duartion so they are subject to more risk. Because in long run there are various other risk associated such as liquidation of company and others.

Therefore we can say that Long-term capital securities are high-risk than with short-term securities.

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