I have this example from CB from CFA institute.
What I am confused about is that, is there any difference between A (default-free nominal bond) and C (default-free inflation-indexed bonds)?
Regarding BEI, CB says difference between default-free zero-coupon bond nominal rate and real rate.
What Schweser says about BEI is that difference between yield on non-inflation indexed bond - yield on inflation indexed bond.
So I reorganized them, risk free nominal rate = risk free inflation indexed bonds, risk free real rate = risk free non-inflation indexed bonds. but having this example, it made me confused.
Another question, if you know. I am on a reading #46, The yield curve and the business cycle. It studies about correlation between yield and real economy. After they talk about economies and financial crisis suddenly talk about “Business cycle” I thought business cycle is something like “growth ->maturity” this cycle or “supply-demand, production related” cycles. Here what they mean about business cycle is about real economic activities. right? Economically good times and bad times.
Thanks teachers in advance for your help!