Amy is a fixed-income portfolio manager. One year ago, given her expectations of a stable yield curve over the coming 12 months and noting that the yield curve was upward sloping, She elected to position her portfolio solely in 20-year US Treasury bonds with a coupon rate of 4% and a price of $101.7593. After a year, she sells the bonds at a price of $109.0629.

a. Which yield curve strategy was most likely implemented by Amy last year?

Circle one. Sell Convexity / A barbell structure / Riding the yield curve

b. Now Amy is expecting the interest rates over the next 12 months to be highly volatile. She is seeking your advice on how to reposition the portfolio. Would you recommend her to sell or buy the call options on the bonds held in the portfolio, and why?