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After building a binomial interest rate tree, you have identified the following possible interest rate paths: Path y0y1 y1y1 y2y1 1 2.51 3.3 3.54 2
After building a binomial interest rate tree, you have identified the following possible interest rate paths:
| Path | y0y1 | y1y1 | y2y1 |
| 1 | 2.51 | 3.3 | 3.54 |
| 2 | 2.51 | 3.3 | 2.92 |
| 3 | 2.51 | 2.32 | 2.92 |
| 4 | 2.51 | 2.32 | 1.51 |
Using pathwise valuation, what is the proper price for a 3 year 5% coupon bond?
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