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should be answered by building ann = n=10-period binomial model for the short-rate,r_{i,j} ri,j . The lattice parameters are:r_{0,0} = 5% r0,0 =5%,u = 1.1

should be answered by building ann =

n=10-period binomial model for the short-rate,r_{i,j}

ri,j

. The lattice parameters are:r_{0,0} = 5\%

r0,0

=5%,u = 1.1

u=1.1,d = 0.9

d=0.9andq =1-q = 1/2

q=1q=1/2.

Compute the price of a zero-coupon bond (ZCB) that matures at timet = 10

t=10and that has face value 100.

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