David Korotkin, CFA and a broker at an investment bank, has a client who is very concerned about maintaining purchasing power over the next year. The investor is conservative, and to date has been pleased with a consistent return of 8.00 percent. The bank’s research department has estimated next year’s inflation rate at 2.0 percent. The client specifically wants to invest in a fixed-coupon bond. Which of the following statements is most correct If Korotkin purchases a bond with a 10.00 percent coupon, the client:()
A. will realize a real gain.
B. will not lose purchasing power.
C. may lose purchasing power.