A bond selling at a discount will have a built-in capital gain if the bond is held to maturity.

Question

Quizplus · Accepted Answer

When a bond is sold at a discount, its price is lower than its face value (or par value). However, at maturity, the bondholder will receive the face value of the bond (assuming no default). Thus, the difference between the discounted purchase price and the face value received at maturity represents a capital gain for the investor.

A Bond Selling at a Discount Will Have a Built-In