Given a current one-period spot rate of S0 = 10%, upward and downward parameters of u = 1.1 and d = .9091, and probability of the spot rate increasing in one period of q = .5:

a. Generate a two-period binomial tree of spot rates.

b. Using the binomial interest rate tree from Question 1.a, determine the value of a two-period, option-free 9% coupon bond with F = 100.

c. Using the binomial interest rate tree from Question 1.a, determine the value of the 9% bond assuming it is callable at a call price of CP =