Over the next 12 months, Joseph expects an overall increase in the yields, with long-term yields rising by 1.00% and short-term yields rising by more than 1.00%, to be specific. Assuming the current yield curve is upward sloping.

a. Should Joseph lengthen or shorten the duration of the portfolio relative to the benchmark, and why?

b. Draw the current and the forecasted yield curve. How does Joseph expect the yield curve to change in one year?

c. Circle the best yield curve strategy given the yield curve forecast

Bullet portfolio / barbell portfolio / laddered portfolio