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Financial Risk Manager Part 2

Financial Risk Manager Part 2

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A Chief Risk Officer (CRO) of a hedge fund has tasked the risk department with developing a term-structure model to effectively adjust interest rates for the hedge fund's options pricing strategy. In pursuit of this objective, the risk department is evaluating different interest rate models characterized by their ability to accommodate both time-varying drift and time-varying volatility functions. Which model accurately encapsulates these characteristics?

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