From CFAI Sampe Exam 1, "Short term rates are expected to fall by 25bps and long term rates increase by 75bps. " The answer is “short duration bullet is preferred”. I am wondering under what situation to the yield curve will the following strategy be preferred? 1. Short duration Barbell 2. Long duration Barbell 3. Barbell strategy over Bullet Strategy
A barbell strategy is preferred if the liabilities are like a barbell. I’ve never seen a case where a barbell is preferred otherwise.
do a search, it was discussed at least twice today