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Suppose annual interest rates are modeled as a stochastic process using a closed, multiplicative binomial lattice, the current interest rate is 5%, the probability of

Suppose annual interest rates are modeled as a stochastic process using a closed, multiplicative binomial lattice, the current interest rate is 5%, the probability of an up-move in rates is .6, and the up-moves are 25%. Find image text in transcribed

(a) E(a) (b) E(s3) (a) E(a) (b) E(s3)

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