Assume that after you estimate the risk neutral model for the continously compounded rate you arrive at the tree presented at the beginning of this chapter. There is equal probability of moving up or down on the tree. Compute the current zero coupon spot curve for all possible maturities.
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Q1: Assume that after you estimate the risk
Q2: You are given the following interest rate
Q4: Assume that after you estimate the risk
Q5: How do you compute the swap rate
Q6: You are given the following interest rate
Q7: Suppose you want to hedge the cap
Q8: In the context of the futures market,
Q9: What is the difference between flat volatility
Q10: What is the difference between empirical volatility
Q11: Does empirical σ (based on past realizations)
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