- If you are holding a Premium Bond which means Price of Bond is higher than its par value. And the Yield to maturity of bond remains stable over time.

Since Yield remains stable the Price of Premium Bond which decrease each year to reach Par value at maturity date as Bond's are redeemed at par value on Maturity date.

Decrease in Price each year will result in capital loss.

- Vice-Versa will happend for discound Bond.

If you are holding a Discount Bond which means Price of Bond is Lower than its par value. And the Yield to maturity of bond remains stable over time.

Since Yield remains stable the Price of Discount Bond which Increase each year to reach Par value at maturity date as Bond's are redeemed at par value on Maturity date.

Increase in Price each year will result in capital gain.

hence, option C