Capital Gains (and Losses) in Bonds Let’s take the Reserve Bank of India and Government of India as examples to illustrate this. We’re doing this only for familiarity; the concept stays the same for practically any country in the world today that is run by a central bank. The Reserve Bank of India has the power to raise and quell interest rates as it sees fit to balance the economy. This is basically the rate at which it will lend funds to all banks under it, so that will automatically alter every interest rate in the market. So let’s assume that at the beginning of Year 1, you bought a
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