That's the whole information in the question. Please help me solve the problem. Thank you!

Maturity expressed in t	Price of bond	CC Yield
0.5	99.1338
1	97.8925
1.5	96.1462

1. Fill in the blanks for the continuous compounded yield. Give me steps

2. How is the change in the short rates described in the Ho-Lee model? See equations (11.1) and

(11.2).

3. Explain what parameter values you have to know to calibrate the future short rate in 6 months,

when . Assume that the standard deviation for changes in short rates is 1.73%. Assume also

that the risk neutral probability is 50%.

4. How would you go about finding those parameter values? You must explain why the SOLVER

function in Excel becomes useful in this case. Note: SOLVER is a program that computes for a solution to mathematical problems where we may have to approximate the answer through trial and errors by iteration. You can learn various mathematical techniques in Numerical Analysis in Math Department.

5. What is the problem with the Ho-Lee model? How does the Black-Derman-Toy (BDT) model remedy the problem?

6. Explain how BDT model constructs the tree.