Required:

a$.$ Suppose Baa$-$rated bonds currently yield $6\mathrm{.}7\%,$ while Aa$-$rated bonds yield $4\mathrm{.}7\%.$ Now suppose that due to an increase in the

expected inflation rate, the yields on both bonds increase by $1\mathrm{.}2\%.$ What would happen to the confidence index? $($Round your answers

to $4$ decimal places.$)$