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If your primary goal is capital gains or avoiding capital

Assume you own a bond which will mature in 5 years and has a yield to maturity which is less than its coupon rate. Your investment time horizon is one year. If your primary goal is capital gains (or avoiding capital loss!) and you strongly believe that interest rates will not change over the next year, what should you do?

A) Sell this bond now.

B) Buy more of this bond.

C) Nothing.

D) Continue holding this bond but sell it in one year.

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Finance Basics: If your primary goal is capital gains or avoiding capital

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