Why is the procedure for valuing a bond with an embedded, Business Management

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Why is the procedure for valuing a bond with an embedded

Answer the following questions about valuing bonds with embedded options using a binomial interest rate tree:

a. Why is the procedure for valuing a bond with an embedded option called "backward induction"?

b. Why is the value produced by a binomial model referred to as an "arbitrage-free" value?

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