Which type of bond is generally considered riskier?

A 30-year zero-coupon bond is generally considered riskier due to several factors associated with its structure and the nature of its cash flows. Unlike coupon bonds, which provide periodic interest payments to investors, a zero-coupon bond does not pay interest until maturity. This means that the investor does not receive any cash flow throughout the life of the bond, increasing the duration and interest rate risk.

The investor is exposed to market fluctuations over a longer period, making the bond's value more sensitive to changes in interest rates. If interest rates rise, the present value of the future cash payment becomes less attractive, leading to a decline in the bond's market value. Additionally, with a longer maturity, some uncertainties regarding issuer creditworthiness and economic conditions may also lead to an increased risk perception.

In contrast, other bond types, such as coupon bonds or corporate bonds, usually provide some income through regular coupon payments, which helps mitigate risk and provides more stable returns. This makes zero-coupon bonds, particularly those with longer maturities, inherently riskier as they offer no interim cash flow and have a longer exposure to interest rate movements.