Fannie Purchased Ten $1,000 Bonds from Her Broker This Year

Multiple Choice

Fannie purchased ten $1,000 bonds from her broker this year.The bonds were issued four years ago and mature in six years.Due to a change in interest rates, the purchase price of the bonds was only $8,200.If the issuing company redeems the bonds for $10,000 at maturity, how will Fannie treat the $10,000 proceeds?

A) $10,000 ordinary income
B) $1,800 ordinary income, $8,200 return of capital
C) $1,800 capital gain, $8,200 return of capital
D) $10,000 return of capital