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Answer: Barbell convexity is greater than (>) bullet's convexity
**Answer: B** Barbell portfolios typically have higher convexity than bullet portfolios with the same duration. This is because: - **Bullet portfolio**: All bonds mature around the same time, resulting in lower convexity - **Barbell portfolio**: Combines short-term and long-term bonds, creating a more dispersed cash flow pattern that increases convexity Higher convexity means the barbell portfolio will benefit more from large interest rate movements in either direction.
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Assume two bond portfolios with identical yields of 5.0%. One is a bullet portfolio with duration equal to 9; the other is a barbell portfolio with duration also equal to 9. How do their convexities compare?
A
Barbell convexity is less than (<) bullet's convexity
B
Barbell convexity is greater than (>) bullet's convexity
C
Convexities are similar
D
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