“The risk-neutral probability of an up- and down-move in the interest rate tree is always 50%, unlike with equity options, where the probabilities depend on the risk-free rate and the size of the up- and down-moves”
Source: Derivatives, Schweser pg. 70
Is this because pricing options on interest rates and bond prices are valued using binomial trees only? I don’t understand the statement. Can someone please clarify? An example would also help. Thanks!