Questions 1-6should be answered by building ann =

n=10-period binomial model for the short-rate,r_{i,j}

ri,j

. The lattice parameters are:r_{0,0} = 5\%

r0,0

=5%,u = 1.1

u=1.1,d = 0.9

d=0.9andq =1-q = 1/2

q=1q=1/2.