barbell and flattening of yield curve
schweser says:
a barbell strategy exploits a flattening of the yield curve but can immunize the duration of a portfolio just as a bullet bond could. the barbell invests in both a short term and long term bond. when the yield curve flattens, the decrease in the long term yield results in a stronger price increase than the decrease in the short term bond price because the long term bond has a longer duration.
not fully understanding it...so what happens when the yield curve becomes steeper and what happens when you use bullet instead....can someone help? thx in advance! |