Question

Question should be answered by building an n=10-period binomial model for the short-rate, r_{i,j} ​ . The lattice parameters are: r_{0,0} = 5% ​ , u=1.1, d = 0.9 and q =1-q = 1/2. Compute the price of a zero-coupon bond (ZCB) that matures at time t = 10t=10 and that has face value 100. Submission Guideline: Give your answer rounded to 2 decimal places. For example, if you compute the answer to be 73.2367%, submit 73.24.

Answer 1

Answer:

builing no 1 will be a-b -10 the lattice will be 63percent