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A customer buys $100,000 of a new issue 30 year U.S. Government bond at 80. At maturity, the customer will have:

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Answer: No capital gain or loss

Step-by-step explanation:

The bonds were bought at discount but will be redeemed at par. This does not mean that there will be a capital gain because the discount will simply be added back to the value of the bond overtime.

When the bond then gets to maturity, the discount would simply have been added back because the bond is to be redeemed at par. Because the bond was always going to be redeemed at par, the difference in price is not considered a capital gain.

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