interest rate volatility

how is the interest rate volatility caclulated while constructing the interest rate tree while valuing bonds with embedded option? is it done using computer programs as the same is not given in books??

also why is it that short term rates are always on a rise while constructing interest rates tree in the examples given in the books?

Interest rate volatility is extrapolated from historical volatility; it’s done with computer programs. On the exam, it will have to be given.

Short term rates are always on the rise because they’re assuming a normal (static) yield curve, into which they are incorporating interest rate volatility: in a normal yield curve, interest rates rise as maturity increases.