An increase in the value of wealth of a bondholder due to an increase in the price of her bonds is called:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Capital gain
When the price of her bonds rises, the bondholder’s wealth goes up. This rise is a capital gain. A fall in bond prices gives a capital loss.
NCERT (2026-27): Glossary: “Capital gain/loss - Increase or decrease in the value of wealth of a bondholder due to an appreciation or reduction in the price of her bonds in the bond market.” “The Speculative Motive … If you are a bond holder a decrease in bond price means a loss to you - similar to a loss you would suffer if the value of a property held by you suddenly depreciates in the market. Such a loss occurring from a falling bond price is called a capital loss to the bond holder. …” |