An investor will experience a capital loss if a parcel of NCDs is purchased at 3.5% p.a.and later sold at 3.3% p.a.

Name: An investor will experience a capital loss if a parcel of NCDs is purchased at 3.5% p.a.and later sold at 3.3% p.a.
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Question

Quizplus · Accepted Answer

A capital loss occurs when an asset is sold for less than its purchase price. The interest rates (3.5% and 3.3%) refer to the yield, not the price. If the yield decreases, the price of the NCDs typically increases, potentially resulting in a capital gain, not a loss.

An Investor Will Experience a Capital Loss If a Parcel