Financial Risk Manager Part 2
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Q-78. Model 1 assumes zero drift and is also called a normal model. Model 2 adds a term for drift. Each of the following is true about these two models except for:
Q-78. Model 1 assumes zero drift and is also called a normal model. Model 2 adds a term for drift. Each of the following is true about these two models except for:
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A
A weakness of Model 1 is that the short-term rate can become negative.
B
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