Find the value of a 3 year bond with a coupon rate of 7.5%

b. make a decision tree and discuss the valuations that you get for each of the bond prices up from time 0 to time 2.

c. Briefly discuss your findings about this bond.

Time 0 :  3%

Time 1:   4%    upper  HH  and  3.5%  lower LL

Time 2:    6.5% upper  HH  and  5.5% HL  and 3.75% LL

Answer rating: 100% (QA)

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