Given the following data on bond yields:

This Year Last Year

Yield on top-rated corporate bonds 9.3% 9.8%

Yield on intermediate-grade corporate bonds 11.8 11.3

a. Calculate the confidence index this year and last year. (Round your answers to 4 decimal places.)

Confidence Index

This Year

Last Year

b. Is the confidence index increasing or decreasing?

Increasing

Decreasing

Question

Marin Ryan

Business

4 February, 02:19

Given the following data on bond yields:

This Year Last Year

Yield on top-rated corporate bonds 9.3% 9.8%

Yield on intermediate-grade corporate bonds 11.8 11.3

a. Calculate the confidence index this year and last year. (Round your answers to 4 decimal places.)

Confidence Index

This Year

Last Year

b. Is the confidence index increasing or decreasing?

Increasing

Decreasing

+2

Answers (1)

Know the Answer?

Allison Mcdaniel · Answer 1

a) Confidence index=Yield on top-rated corporate bonds / Yield on intermediate-grade corporate bonds

This year=9.3%/11.8%=0.788

Last Year=9.8%/11.3%=0.8673

b) From the calculations we can see that confidence index is decreasing from 0.8673 to 0.788.