Question: The interest rates at each node on the binomial interest rate tree are actually A. implied forward rates. B. zero-coupon bond rates. C. market-determined yields

The interest rates at each node on the binomial interest rate tree are actually

A.

implied forward rates.
B.

zero-coupon bond rates.
C.

market-determined yields to maturity.

The binomial interest rate tree framework makes it possible to account for the effect of ______on bond value.

A.

zero-coupon rates.
B.

the yield curve.
C.

interest rate volatility.

A positively sloping yield curve will produce zero coupon bond rates that with increasing maturity.

A.

increase.
B.

decrease.
C.

remain the same.

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