# Term Premium

*Macro & Economy — Finicade finance glossary*

The term premium is the extra yield investors demand for holding long bonds instead of rolling short ones — compensation for bearing rate uncertainty. It's the wedge between long yields and pure expectations, and it can be negative when demand for safe long-duration assets is intense. Because it can't be observed directly it must be modelled, which is why estimates from different central banks disagree by meaningful amounts.

**Also known as:** term premia, duration premium

**Related terms:** [Yield Curve](https://finicade.com/glossary/yield-curve), [Forward Rate](https://finicade.com/glossary/forward-rate), [Inverted Yield Curve](https://finicade.com/glossary/inverted-yield-curve), [Breakeven Inflation](https://finicade.com/glossary/breakeven-inflation), [Risk Premium](https://finicade.com/glossary/risk-premium)

Source: https://finicade.com/glossary/term-premium