Jimmy is a bond market participant. If he believes that current forward rates are higher than future spot rates, how might he profit from the result?

A. The yield curve is appropriately priced, and duration is in fair value

B. Take advantage of the market's mispricing and extend the duration

C. Shorten portfolio duration. Higher rates threaten the prices of your bonds

2. What will happen to a portfolio of mortgages or mortgage-backed securities when interest rates decrease?

A. the rate at which the holder could reinvest any receipts of coupons & principal would increase

B. the holder expects to receive principal more quickly than initially anticipated now

C. prepayment speeds would decrease