Question

Rosina purchased a 15-year bond at par value when it was initially issued. the bond has a coupon rate of 7 percent and matures 13 years from now. if the current market rate for this type and quality of bond is 7.5 percent, then rosina should expect:

Answer 1

Rosina should expect "to realize a capital loss if she sold the bond at today's market price."

A capital loss is the loss brought about when a capital resource, for example, a speculation or land, diminishes in esteem. This misfortune isn't understood until the point that the benefit is sold at a cost that is lower than the first price tag. A capital loss is basically the distinction between the price tag and the cost at which the advantage is sold, where the deal cost is lower than the price tag. For instance, if a financial specialist purchased a house for $250,000 and sold the house five years after the fact for $200,000, the speculator understands a capital loss of $50,000.