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The on-the-run issue for ABC Company is shown below: Using the bootstrapping methodology, the spot rates are: Assuming an interest rate volatility of 10% for

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The on-the-run issue for ABC Company is shown below: Using the bootstrapping methodology, the spot rates are: Assuming an interest rate volatility of 10% for the 1 -year rate, the binomial interest rate tree for valuing a bond with maturity of up to three years is shown below: d) Using the binomial tree, determine the value of an 8.5\% 3-year option free-bond

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