Bond valuation QBank computing, valuation, part, interest

busterbluth

Hi,
Need help on this qbank #89417.
Annual Coupon
$6.25
Interest Payment
Semi-annual
Part 1)
Wall is having a few problems computing the bond prices using the interest rate tree. He would like to compute the value of the non-callable bond at node A given the relevant part of the tree. Using the referenced portions of the tree, what is the value of the non-callable bond at node A?
Relevant part of interest rate tree:
8.95%
7.91%
7.23%
Corresponding part of non-callable bond tree:
$92.38
A
$96.83
The value of the bond at node A is closest to:
A) $90.56.
B) $94.01.
C) $97.02.
Your answer: A was incorrect. The correct answer was B) $94.01.
This value of the non-callable bond at node A is computed as follows:
Bond Value = {0.5

ramdabom

well done, thanks cpk.