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Binomial Interest Rate Tree: Assume a current one-period spot rate of S0 = 11%, u = 1.05, d = (1/u), and q = . Show a two-period binomial tree b....

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1. Binomial Interest Rate Tree: Assume a current one-period spot rate of S 0 = 11%, u = 1.05, d = (1/u), and q = .5 a. Show a two-period binomial tree b. Using a tree, determine the value of a three-period , option-free 8% coupon bond with F = 100. c. Using the tree, determine the value of the bond assuming it is puttable at a put price of 95. I need you to construct your own spreadsheet but you could check your answers with the one on BB. 2. Valuation of Convertible Bond Given an ABC convertible bond with F = 1,000, maturity of three periods, coupon rate of 9%, CR = 11, current stock price of $105, u = 1.1 on the stock, d = (1/u) on the stock and q = 0.5. Calculate the value of the bond using a binomial tree of stock prices and assuming the bond is callable at CP = 1,100 and a S 0 = 6% with associated spot rates estimated by ? ! =0.16−0.001∗? ! ! .
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