What is often a disadvantage of long-term bonds?

The option indicating greater interest rate risk is the most accurate description of a disadvantage associated with long-term bonds. When investors hold long-term bonds, they are exposed to changing interest rates over an extended period. If interest rates rise, the market value of existing bonds typically decreases because new bonds are likely issued with higher yields. This inverse relationship means that long-term bondholders face more significant price fluctuations in response to interest rate changes, resulting in a higher degree of interest rate risk compared to shorter-term bonds.

In contrast, the other options are characteristic advantages or neutral aspects of long-term bonds. Higher yields are often associated with longer maturities because investors expect to earn more to compensate for the increased risk of holding funds over an extended time. Lower risk is generally not applicable to long-term bonds, as they can be subject to greater volatility. Tax exemptions may sometimes apply to certain bonds, such as municipal bonds, but this doesn't necessarily pertain directly to all long-term bonds. Thus, greater interest rate risk stands out as a notable disadvantage unique to long-term bonds.