Construct a three-step binomial interest rate model assuming the following: 1. The current one-period spot rate is 7% 2. The upward parameter u = 1.15 3. The downward parameter d = .85 Value a 3-period option-free bond with the following characteristics: 1. The bond matures in 3 periods 2. The bond has no default risk 3. The bond pays 9% coupon each period 4. The bond pays $100 principal at maturity 5. The probability of an up and down movement is the same (50%). Assume that the bond in part (b) is a callable bond at 103, starting in period 1 (The issuer cannot call the bond at time zero). Value the 3-period callable bond, showing in each period (0, 1, and 2) and for each of the interest rates, the value of the bond (non-callable), the value of the call option, and the value of the callable bond. Assume that the bond in part (b) is a putable bond at 100, starting in period 1 (The issuer cannot call the bond at time zero). Value the 3-period putable bond showing in each period (0, 1, and 2) and for each of the interest rates, the value of the bond (non-callable), the value of the call option, and the value of the callable bond. Construct a three-step binomial interest rate model assuming the following: 1. The current one-period spot rate is 7% 2. The upward parameter u = 1.15 3. The downward parameter d = .85 Value a 3-period option-free bond with the following characteristics: 1. The bond matures in 3 periods 2. The bond has no default risk 3. The bond pays 9% coupon each period 4. The bond pays $100 principal at maturity 5. The probability of an up and down movement is the same (50%). Assume that the bond in part (b) is a callable bond at 103, starting in period 1 (The issuer cannot call the bond at time zero). Value the 3-period callable bond, showing in each period (0, 1, and 2) and for each of the interest rates, the value of the bond (non-callable), the value of the call option, and the value of the callable bond. Assume that the bond in part (b) is a putable bond at 100, starting in period 1 (The issuer cannot call the bond at time zero). Value the 3-period putable bond showing in each period (0, 1, and 2) and for each of the interest rates, the value of the bond (non-callable), the value of the call option, and the value of the callable bond