Interpreting Confidence Index and Yield Spread in CFA Level 1 Exam

The Technicians' Interpretation of the Confidence Index Assumption

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The technicians' interpretation of the confidence index assumes that changes in the yield spread are caused

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Technicians interpret the confidence index as indicative of broader investment bullishness or bearishness toward the market. But changes in the relative yields of bonds (which determine the value of the index) can be caused by changes in the supply of bonds as well as by changes in investor demand.