Continuous and discrete models in finance,in particular for stochastic interest rates

The paper explains a general method for constructing interest rate models in discrete time. The relevant term structure can be computed recursively in the Markovian case with finite state space. Calculations become particularly easy for binary and ternary tree structures.It is instructive to look at the diffusion limits of such Markov Chains. This diffusion limit does not inherit all properties of the Markov Chain which it approximates.