Question: Calculate the E ( I ) given the following information: Housing price are expected to increase resulting in lower consumer spending and an annual decline

Calculate the E(I) given the following information:

Housing price are expected to increase resulting in lower consumer spending and an annual decline in economic growth of 32bps. Annualized nominal yields, i, are currently 255bps but the imminent shutdown of the US Government has increased risk premiums by 15bps.

a) Write inputs into equation to solve for E(I).

b) Write solution in basis points.

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