Question: Suppose Baa - rated bonds currently yield 7 % , while Aa - rated bonds yield 5 % . Now suppose that due to an

Suppose Baa-rated bonds currently yield 7%, while Aa-rated bonds yield 5%. Now suppose that due to an increase in the expected inflation rate, the yields on both bonds increase by 1%. What would happen to the confidence index? (Round your answers to 4 decimal places.

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