What describes the relationship between interest rates and the terms to maturity while keeping default risk constant?

The correct answer is the Term Structure of Interest Rates, which describes how interest rates change with different terms to maturity while assuming default risk remains constant. This concept highlights the relationship between the time until a financial instrument matures and its associated interest rate. Generally, longer-term securities tend to offer higher yields to compensate investors for the increased risk associated with a longer holding period, such as sensitivity to interest rate fluctuations.

The yield curve, typically a graphical representation of the term structure of interest rates, shows interest rates on debt for varying maturities. While it is closely related to the term structure, it specifically illustrates the data visually rather than describing the underlying relationship itself.

The discount rate reflects the interest rate used to find the present value of future cash flows, and while it can be influenced by the term structure, it does not specifically describe the relationship between interest rates and terms to maturity.

The risk premium refers to the extra return that investors demand to compensate for the risk of holding a risky asset over a risk-free asset. It is an important concept in understanding interest rates and how they can differ between assets but does not directly define the relationship between interest rates and maturity terms.