Winters AM - Binomial IR tree question
Winters AM is a fixed income management firm that invests in a wide variety of debt instruments. Lauren Winters, CFA is focusing on bonds with embedded optionality. She builds the following binomial IR tree based on 10% vol. Her goal is to value a new annual pay 4.5% bond, callable at 100.5 and maturing in 3 years with a par value of $100.
Q43. The value of the bond is closest to:
can someone please talk me through this one as I am lost! thanks
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