Answer: Barbell outperforms bullet

**Answer: A** For LARGE parallel shifts in the yield curve, the barbell portfolio typically outperforms the bullet portfolio due to its higher convexity. **Reasoning**: - **Convexity effect**: Higher convexity in the barbell portfolio provides better price protection against large interest rate movements - **Price-yield relationship**: For large rate changes, the convexity term becomes more significant in the price change calculation - **Mathematical basis**: Price change ≈ -Duration × Δy + ½ × Convexity × (Δy)² Since the barbell has higher convexity, it benefits more from the squared term when Δy is large.

Author: LeetQuiz Editorial Team