8. Risks of investing in bonds Aa Aa E The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: U.S. Treasury securities (USTs), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the dropdown menus to label each security's profile correctly: YIELD 1% UST BBB 0 5 10 15 20 25 30 YEARS TO MATURITY Is the default spread between the corporate bonds and the Treasury securities greater for shorter or longer maturities? O Long-term maturities Short-term maturities Answer the following question based on your understanding of interest rate risk and reinvestment rate risk. True or False: Assuming all else is equal, the shorter a bond's maturity, the more its price will change in response to a given change in interest rates. O False True