The chart on page 167 of book 4 of the required readings is driving me nuts. (Especially considering I remember understanding it the first go-round. What does it mean for the positive and negative convex securities to get “steeper” and “flatter”. What chart would represent a perfectly flat yield curve?

Maybe I’m not sure what you’re asking, but its just a chart showing the behavior of yields for a security exhibiting positive and negative convexity. Flatter - would look more like a straight line. Steeper - would be more curved. A chart with a horizontal line would represent a flat yield curve, I’m not really sure what else to say regarding that.