Constructing a Binomial interest rate tree
Why do we need to use forward rate multiplied by e(+1) and e(-1) standard deviation fot Time 1; and by e(+2) and e(-2) standard deviations for Time 2? In my understanding, since Time 1 is accommodating one standard deviation already, would not it be logical to multiply by e(+1)& e(-1) at all consecutive steps?
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