Suppose the 1-year spot rate is 0.8%, and that a 2-year 1.5% annual coupon, a 3-year 2% annual coupon bonds are trading at par ($100).

Calibrate a 2-year binomial interest rate model, assuming that interest rate volatility is 10%. What is the lowest rate at t=2?

Assume annual compounding. Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.

Question 3 2 pts Suppose the 1-year spot rate is 0.8%, and that a 2-year 1.5% annual coupon, a 3-year 2% annual coupon bonds are trading at par ($100). Calibrate a 2-year binomial interest rate model, assuming that interest rate volatility o is 10%. What is the lowest rate at t=2? Assume annual compounding. Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321. Question 3 2 pts Suppose the 1-year spot rate is 0.8%, and that a 2-year 1.5% annual coupon, a 3-year 2% annual coupon bonds are trading at par ($100). Calibrate a 2-year binomial interest rate model, assuming that interest rate volatility o is 10%. What is the lowest rate at t=2? Assume annual compounding. Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321