Please do exercise #1. Equation (8.49) is provided at the bottom. Thank you.

1. Suppose that a bond model uses the bond volatility o(t, T) = T - t. Use equation (8.49) to show that 12 r(t) a in P (0, 1) + B(t) 2 Bond Price P(t,T) = P(0,t) P(0, T) exp u 1046.1 fo?(5, 1) o(s, T)}ds + [focs , T) - 0(, 1)}dB() (8.49) 1. Suppose that a bond model uses the bond volatility o(t, T) = T - t. Use equation (8.49) to show that 12 r(t) a in P (0, 1) + B(t) 2 Bond Price P(t,T) = P(0,t) P(0, T) exp u 1046.1 fo?(5, 1) o(s, T)}ds + [focs , T) - 0(, 1)}dB() (8.49)