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QUESTION 20 An investor buys an annual pay, 4% coupon bond for 102. The trade will settle immediately after the annual coupon
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Answer #1

Answer is A. a Capital Loss.

Holding Period returns includes Capital Gains / Losses and Income.

Capital Gains or Losses means Price at the Period minus Initial Cost.

In the given Problem, Price at the end of Period ($101.50) minus Initial Cost ($102) gives us loss of $0.50.

So there is a Capital Loss.

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