Using a 50%; 50% probabilities binary-interest-rate-tree model, and the following assumptions: r0 = 0.900%, rL =...

  

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Using a 50%; 50% probabilities binary-interest-rate-tree model, and the following assumptions: r0 = 0.900%, rL = 2.200%, rH = 2.531%, volatility = 7%. Calculate the price of the 2-year 3.5% option-free bond. Using a 50%; 50% probabilities binary-interest-rate-tree model, and the following assumptions: r0 = 0.900%, rL = 2.200%, rH = 2.531%, volatility = 7%. Calculate the price of the 2-year 3.5% option-free bond.

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To calculate the price of the 2year 35 optionfree bond using the binomial interest rate tree model w... View the full answer