Suppose baa-rated bonds currently yield 79 while aa-rated


Suppose Baa-rated bonds currently yield 7.9%, while Aa-rated bonds yield 5.9%. Now suppose that due to an increase in the expected inflation rate, the yields on both bonds increase by 1.2%. What would happen to the confidence index? (Round your answers to 4 decimal places.)

 

  Confidence index (Click to select) Increases Decreases from  to .

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Financial Management: Suppose baa-rated bonds currently yield 79 while aa-rated
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