Final answer:
A buy-and-hold strategy is an investment strategy that stays clear of any potential interest rate risk on an early disposition by keeping each individual bond in the portfolio until its actual maturity date.
Step-by-step explanation:
An investment strategy that stays clear of any potential interest rate risk on an early disposition and keeps each individual bond in the portfolio until its actual maturity date is called a buy-and-hold strategy.
With a buy-and-hold strategy, investors purchase bonds with the intention of holding them until they mature. This strategy eliminates the risk of price fluctuations caused by changes in interest rates since the bond will be held until it reaches its maturity date and the principal is repaid.
For example, let's say an investor purchases a bond with a fixed interest rate of 5% and a maturity date of 10 years. Regardless of changes in interest rates during that time, the investor will continue to receive the fixed interest payments and will get their initial investment back when the bond reaches maturity.