# Question

How strong is the correlation between the inflation rate and 30-year treasury yields? The following data published by Fuji Securities are given as pairs of inflation rates and treasury yields for selected years over a 35-year period.

Inflation Rate ..... 30-Year Treasury Yield

1.57% ......... 3.05%

2.23 .......... 3.93

2.17 .......... 4.68

4.53 ......... 6.57

7.25 ......... 8.27

9.25 .......... 12.01

5.00 ......... 10.27

4.62 ......... 8.45

Compute the Pearson product-moment correlation coefficient to determine the strength of the correlation between these two variables. Comment on the strength and direction of the correlation.

Inflation Rate ..... 30-Year Treasury Yield

1.57% ......... 3.05%

2.23 .......... 3.93

2.17 .......... 4.68

4.53 ......... 6.57

7.25 ......... 8.27

9.25 .......... 12.01

5.00 ......... 10.27

4.62 ......... 8.45

Compute the Pearson product-moment correlation coefficient to determine the strength of the correlation between these two variables. Comment on the strength and direction of the correlation.

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