Investor A enters into a 2y10y curve steepening trade by taking opposite positions on the 2year bond and the 10year bond. Note that the PVBP2year =0.015, PVBP10year =0.075

1. What is his view about the slope of the curve measured as the yield spread between long- tenor minus short-tenor yield?

2. Which bond does he buy and which one does he sell in order to implement a curve steepening trade?

3. In order to have a duration neutral trade how much money should he invest in 2year bond given that he allocates USD10,000 in 10yr bond?

4. Between the curve flattening and a parallel shift, which one of the two would hurt the investor less, meaning suffer lower losses?