Exercise 23.2.9 Start with a binomial interest rate tree but without the branching probabilities, such as Fig.

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Exercise 23.2.9 Start with a binomial interest rate tree but without the branching probabilities, such as Fig. 23.2. (1) Suppose the state price tree is also given.

(2) Suppose only the state prices at the terminal nodes are given and assume that the path probabilities for all paths reaching the same node are equal. How do we calculate the branching probabilities at each node in either case? (The result was called the implied binomial tree in Exercise 9.4.3.)

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