rahul.goyl
Member
Hi David,
Can you plz explain this one.
A bond with a 10 percent annual coupon will mature in two years at par value. The current one-year spot rate is 8.5 percent. For the second year, the yield volatility model forecasts that the one-year rate will be either eight or nine percent. Using a binomial interest rate tree, what is the current price?
A)103.572.
B)101.837.
C)102.659.
D)101.761.
Regards,
Rahul
Can you plz explain this one.
A bond with a 10 percent annual coupon will mature in two years at par value. The current one-year spot rate is 8.5 percent. For the second year, the yield volatility model forecasts that the one-year rate will be either eight or nine percent. Using a binomial interest rate tree, what is the current price?
A)103.572.
B)101.837.
C)102.659.
D)101.761.
Regards,
Rahul
