Respuesta :
When the yield to maturity on a bond increases, the price of the bond decreases. The profit made on the sale of an asset whose value has improved throughout the holding term is known as capital gain.
What is meant by Bond?
A bond is a sort of security used in finance where the issuer owes the holder a debt and is required, depending on the terms, to repay the principal and interest on the bond at the maturity date. In exchange for regular interest payments, a bondholder loans money to a business or the government for a predetermined length of time. When the bond matures, the bond's issuer pays the investor their money back.
The profit made on the sale of an asset whose value has improved throughout the holding term is known as capital gain in economics. A car, a business, or tangible or intangible property like shares are all examples of assets. The fact that long-term capital gains are subject to reduced capital gains tax rates is one advantage of these gains. Holding assets for a longer time period is thus one of the strategies to lower the tax that is due.
Hence, When the yield to maturity on a bond increases, the price of the bond decreases.
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