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Fixed Income Chapter 9 homework

Fixed Income Chapter 9 homework - Chapter 9 Valuing bonds...

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Chapter 9- Valuing bonds with Embedded Options 1) Which of the following statements concerning the calculation of value at a node in a binomial interest rate tree is TRUE? The value at each node is the: a. Present value of the two possible values from the next period b. Average of the present values of the two possible values from the next period c. Sum of the present values of the two possible values from the next period d. Average of the future values of the two possible values from the next period 2) An increase in interest rate volatility:

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