Question: Baa-rated bonds currently yield 6%, while Aa-rated bonds yield 4%. Suppose that due to an increase in the expected inflation rate, the yields on both

Baa-rated bonds currently yield 6%, while Aa-rated bonds yield 4%. Suppose that due to an increase in the expected inflation rate, the yields on both bonds increase by 1.3%. a. Calculate the new confidence index? (Round your answer to 3 decimal places.)

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