Fixed Income - Interest Rate Tree

Volume 5, page 359 (CFAI book). Example 8, Question 2.

Does anyone know how the one-year interest rates are calculated in the interest rate tree? Thanks.

Presumably they have a forward curve and they’re changing the interest rates ±10% per year from that forward curve.

I wouldn’t worry about it. They’ll give you the interest rates in the tree; you just need to know how to use them.