Given:

Assume you are managing a fixed-income / bond portfolio that is currently positioned with equal exposure to short-term and intermediate-term paper.

You are currently holding 15% AAA-rated issues, 10% AA, 35% BBB, 20% BB and 20% B.

You face no limitations on your fixed-income holdings regarding credit quality or maturity, but you are restricted to hold only domestic fixed-income securities; you are not permitted to use equity, options or derivative securities.

______BP1. Your team of economists forecasts declining interest rates across the entire yield curve, with more movement on the long end of the curve. In order to maximize capital gains/minimize losses in your portfolio, how would you position securities in the portfolio and why?