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8. Suppose the 1-year spot rate is 1%, and a 2-year 2.5% annual coupon, benchmark...

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Finance

8. Suppose the 1-year spot rate is 1%, and a 2-year 2.5% annual coupon, benchmark bond is trading at par ($100). Calibrate a 1-year binomial interest rate model, assuming that interest volatility is15%. Assume annual compounding. Round your answer to 4 decimal places

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