a "buy-and-hold" investor purchases a fixed-rate bond at a discount and holds the securi- ty until it matures. Which of the following sources of return is least likely to contribute to The investor's total return over the investment horizon, assuming all payments are made as Scheduled?
A) Capital gain
B) Principal payment
C) reinvestment of coupon payments

Question

Quizplus · Accepted Answer

A "buy-and-hold" investor who purchases a fixed-rate bond at a discount and holds the security until it matures is likely to receive a return from the coupon payments and the principal payment. However, capital gain is least likely to contribute to the investor's total return, as the investor is holding the security until maturity and not intending to sell it before then.

A "Buy-And-Hold" Investor Purchases a Fixed-Rate Bond at a Discount