schweser vol 1 exam 3 afternoon # 99 an investor buys a par bond that pays an annual coupon of $80. He sells the par bond at par 1 year later. a. capital gain of $80 b. no capital gain or loss schweser says no capital gain or loss. I’m confused. Here’s the exact wording: … if the investor sells the bond today (immediately after receiving the second coupon payment, and with no transaction costs), he will have:
capital gains are appreciation in the security i believe. dividends/coupons are taxed at personal income level…i may be wrong but thats my understanding
if he bought it at a discount it would appreciate to par and he would have capital gain, if he bought it at a premium it would depreciate to par he would have a capital loss, because he bought it at par, there is no capital gain, only interest income.
Home- since it was in the last year, any income he received would not qualify as cap gain Interest from bonds is not cap gain, they go through income statement.