What are the differences?
None!
In derivative, caplets and floorlets, you gotta use the rate in current period in the fixed income section you use the prior period rate
To do what?
in fixed income the probability is always 50% but in Derivatives you goot use the formula
to add to 1 and divide the amount
In other words, to discount the future value to the present value.
I believe that you’re mistaken: in both you use the prior period rate.
It’s unfortunate that they refer to those weightings as probabilities; they’re not.
to get the cap value not to discount
And getting the cap value involves discounting the future value of each caplet to the present and adding the PVs.
And each caplet is discounted at the rate from the prior period node.