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A risk manager at a hedge fund is evaluating various models that can effectively incorporate mean reversion and a risk premium into the term structure of interest rates. What is true about the Vasicek model in this context?
A
It incorporates the mean reversion feature and its drift is always zero.
B
It incorporates the mean reversion feature and models the risk premium as a component of a constant or changing drift.
C
It cannot incorporate risk premium and its drift is always zero.
D
It cannot capture the mean reversion feature but can be used to model the time-varying risk premium.
