Problem Solving Question [(a)-(e)] period i=0 i=1 time (in years) t=0 t = 0.5 (1,0) = 5% with prob. p = 1/2 To = 3% (1,d) = 2% with prob. 1-p = 1/2 Consider the interest rate tree in the above Table. (continuously compounded) (a) Compute the expected 6-month Treasury rate E[r]. (mean return of r) Please answer percentage number with two decimal places. Don't put % in the end. (e.g. if E[r] = 0.0420 = 4.20%, then put 4.20 as an answer.)