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Characteristics of a model for the term structure

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Reference no: EM131186191

1. List five desirable characteristics of a model for the term structure of interest rates.

2. State the Stochastic Differential Equation satisfied by the short rate in the Vasicek model for the term structure of interest rates.

Comment on the appropriateness of the Vasicek model in the light of your answer to part (1).

Reference no: EM131186191

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