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Basic Question 1 of 9
What is the discount rate in the binomial interest rate tree?
B. forward rate
C. yield to maturity
A. spot rate
B. forward rate
C. yield to maturity
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe the process of calibrating a binomial interest rate tree to match a specific term structure;
describe the backward induction valuation methodology and calculate the value of a fixed-income instrument given its cash flow at each node;
compare pricing using the zero-coupon yield curve with pricing using an arbitrage-free binomial lattice;
CFA® 2026 Level II Curriculum, Volume 4, Module 27.