(you are required to show your calculation process by Excel or MATLAB.)

Let the price of zero-coupon bond that was given as follows:

Year to maturity zero-coupon bond price yield

1 0.9541 4.811%

2 0.8949 5.709%

3 0.8319 6.327%

4 0.7717 6.693%

Assume The bond price at maturity is 1.

Assume interest rate volatility of 0.5% of one year maturity of bonds.

1) Based model based on Ho-Lee model, Draw the binomial tree.

2) Based model based on Ho-Lee model, Draw the binomial tree by using Nelson-Ramaswamy method.

this is example problem.