Determine the change in interest rate.

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Chapter 11, Problem 11.1CC

To determine

Determine the change in interest rate.

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Suppose that the market interest rate in an economy is 9 percent and a bond promises to pay $735 after one year, $858 two years from now, and finally $1410 three years from now. The equilibrium market price of this bond $2485.25. (Round your response to two decimal places.) If this bond were to sell for $1988 in the market, then it is profitable to buy this bond from investors' perspectives. not to buy

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