Question $1$:

If you are betting on a flattening yield curve, what would you like to do$?$

a$)$ Short shorter maturity bonds and long longer maturity bonds.

b$)$ Short long maturity bonds and long shorter maturity bonds.

c$)$ Short shorter maturity bonds and short longer maturity bonds.

d$)$ Long shorter maturity bonds and long longer maturity bonds.

Question $2$:

Choose the most correct statement.

a$)$ The strategy in Q$1$ is arbitrage.

b$)$ The strategy in Q$1$ is speculation.

c$)$ The strategy in Q$1$ is gambling.

d$)$ The strategy in Q$1$ is hedging.

Question $3$:

If you are betting on a steepening yield curve, what would you like to do$?$

a$)$ Follow the same strategy in Q$1$ to hedge.

b$)$ Follow the same strategy in Q$1$ to speculate.

c$)$ Do the opposite of what should be done in Q$1$ to hedge.

d$)$Do the opposite of what should be done in Q$1$ to speculate.