• If interest rates in the market (or YTM of the bond) falls below the yield (YTM) /interest rate that you purchased the bond at, the price of the bond will increase. If you sell the bond at this point, you will realize a capital gain on the bond.
  • If interest rates go up from the point you purchased the bond and you sell the bond before maturity, you will incur a capital loss.
  • However, if you hold the bond until maturity even when interest rates move up, you will still get the initial Yield to maturity (YTM) promised to you,