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Two years ago, Mathew purchased a 10 year government bond with a yield of 4.75%. Today, the interest rate on government bonds with 8 years
Two years ago, Mathew purchased a 10 year government bond with a yield of 4.75%. Today, the interest rate on government bonds with 8 years to maturity is 3.5%. If Mathew sells his bond today, he most likely will
1) realize a capital gain.
2) realize a capital loss.
3) sell the bond at face value.
4) sell the bond at par value.
Explain your answer.
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