Question
Suppose Baa-rated bonds currently yield 6.1%, while Aa-rated bonds yield 4.1%. Now suppose that due to...
Suppose Baa-rated bonds currently yield 6.1%, while Aa-rated bonds yield 4.1%. Now suppose that due to an increase in the expected inflation rate, the yields on both bonds increase by 1.0%. What would happen to the confidence index? (Round your answers to 4 decimal places.)
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