In the fixed income section
CFA Book #4 - page 54 - question 8
“Alonso’s strategy will be to sell all the 5-year Treasury bonds, and invest the proceeds in 10-year Treasury bonds” "He expects the yield curve to flatten and forecasts a six-month horizon price of the 5-year Treasury bond to be $99.50. " The bond is currently 100.40625
If the yield curve flattens, shouldn’t the price forecast go up? (alrite, fine if the curve was inverted, then I can understand this, but the problem doesn’t specify.)
This is the confusing part: The answer for the HPR calculation doesn’t make sense, why is it +99.5-100.40625 ?? If we are selling now when it’s more expensive, shouldn’t those signs be reversed?
or am i missing something