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A bond with a 10 percent annual coupon will mature in two years at par value. The current one-year spot rate is 8.5 percent. For the second year, the yield volatility model forecasts that the one-year rate will be either eight or nine percent. Using a binomial interest rate tree, what is the current price? A. 103.572. B. 101.837. C. 102.659. D. 101.761. |