No capital gain?
If yield to maturity and risk factors remain constant over the remainder of a coupon bond’s life, and the bond is trading at a discount today, it will have a:
negative current yield and a capital gain.
positive current yield and a capital gain.
positive current yield, only.
A coupon bond will have a positive current yield. It will not have a capital gain because its price will increase toward par along its constant-yield price trajectory as long as its YTM remains constant.
What am I missing here? If the bond is at a discount it will increase to par over the line of the bond. How is there no capital gain (price appreciation)?
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