The binomial interest rate tree for valuing a bond with a maturity of up to four years is shown below. Attach/show your work. 2. a] Find the value of the option-free bond b] Find the value of the putable bond c] Find the value of the embedded put option Putable Bond Valuation Binomial Interest Rate Tree Years To Maturity Coupon Rate 4 6.50% Periods/Year 1 Face Value [$] 100 Coupon 'C" 6.5 Year 0 Year 1 Year 2 Year 3 Put Schedule N/A 99 100 98 Interest Rate Tree 3.5000%5.4289% 7.0053%9.1987% 4.4448% 5.7354%7.5312% 6.1660% 4.6958% 5.0483% Answers Bond Values, Non-Putable Year 0 Year 1 Year 2 Year 3 Year 4 Option-Free Bond Bond Values, Putable Market Price of Option-Free Bond Market Price of Putable Bond Cost (Value) of Put Option The binomial interest rate tree for valuing a bond with a maturity of up to four years is shown below. Attach/show your work. 2. a] Find the value of the option-free bond b] Find the value of the putable bond c] Find the value of the embedded put option Putable Bond Valuation Binomial Interest Rate Tree Years To Maturity Coupon Rate 4 6.50% Periods/Year 1 Face Value [$] 100 Coupon 'C" 6.5 Year 0 Year 1 Year 2 Year 3 Put Schedule N/A 99 100 98 Interest Rate Tree 3.5000%5.4289% 7.0053%9.1987% 4.4448% 5.7354%7.5312% 6.1660% 4.6958% 5.0483% Answers Bond Values, Non-Putable Year 0 Year 1 Year 2 Year 3 Year 4 Option-Free Bond Bond Values, Putable Market Price of Option-Free Bond Market Price of Putable Bond Cost (Value) of Put Option