Binomial Interest Rate Trees Explained | CFA & FRM

Ryan O'Connell, CFA, FRM explains Binomial Interest Rate Trees. He shows how Backward Induction works with an option-free bond. This video will be especially useful for CFA Level 2 Candidates.

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Chapters:
0:00 - Explanation of Par Rates
0:52 - Estimating the Binomial Interest Rate Tree
3:40 - Backward Induction of a 1 Year Par Bond
4:26 - Finding the Lower Bound Year 1 Forward Rate
7:23 - Finding the Lower Bound Year 2 Forward Rate

*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC