Market value risk should be similar for the portfolio and the benchmark. The longer the duration, the greater the total return potential because rates are low now and the yield curve is so steep. The statement is wrong. Answer says: although market risk should be comparable for the portfolio and benchmark index, given a normal upward sloping yield curve, a bond portfolio’s yield to maturity increases as the maturity of the portfolio increases. Can someone explain their answer please?
short term rates are low. Long term rates are high. As time passes you will approach long term rates. Expecting rates to rise. Any more context to this