Pricing interest Rate Sensitive Securities I

In case of pricing stocks we use a tree assuming the markovian model. This does not work n case of fixed income securities like bonds, since th amount to be paid at the end is fixed. What does determine the present value of a fixed income secuirty is an ineterst rate model. The interest rate model can be assumed to be markovian.
For veery interest rate model there is an equivalent term structure model that can be observed only in the market. The probability of rise and fall from a node in the interest rate tree is assumed to be (1) independent of time and state (2) dependent on state (3) dependent on time (4) dependent on time and state. Ingersoll and Ross methods capture the term structure the best but are computationaly difficult.
The main idea is that given the sequence of future discountings, the expected present value of asecurity can be calculated. In equity market the lognormal model is standard. In FIRC market there is no standard interest rate tree model. Each business house uses its own peoprietary MODEL.