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I'm not sure I understand your example.

Which part? I think you clarified it here:

On May 15, 30-year Treasury bonds were auctioned with a 5% coupon. Right now a $1000 face value 30-year bond from that auction can be sole for approximately $1050 (ignoring commission). That's a 5% gain, if you chose to sell.

Seems like the same sort of example except I'm referring exclusively to bond funds. In my example, it is a 9.09% gain. If I only watch the bond fund price and sell before it goes below my purchase price, I'll have a gain. From all the replies, I don't know if others agree or disagree.
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