Question: Suppose Baa-rated bonds currently yield 7%, while Aa-rated bonds yield 5%. Suppose that due to an increase in the expected inflation rate, the yields on

Suppose Baa-rated bonds currently yield 7%, while Aa-rated bonds yield 5%.

Suppose Baa-rated bonds currently yield 7%, while Aa-rated bonds yield 5%. Suppose that due to an increase in the expected inflation rate, the yields on both bonds increase by 1.1%. a. Calculate the new confidence index? (Round your answer to 3 decimal places.) Confidence index b. Would this be interpreted as bullish or bearish by a technical analyst? Bullish Bearish

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