Explain why it might be reasonable to model interest rates by a mean-reverting process. What is the

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Explain why it might be reasonable to model interest rates by a mean-reverting process. What is the fundamental difference that makes this (potentially) appropriate for interest rates but not for stocks?

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An Introduction to the Mathematics of Financial Derivatives

ISBN: 978-0123846822

3rd edition

Authors: Ali Hirsa, Salih N. Neftci

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Question Posted: Apr 29, 2016 03:45 PM

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Explain why it might be reasonable to model interest rates by a mean-reverting process. What is the

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It is natural to assume that interest rates will remain within a bou...View the full answer

An Introduction to the Mathematics of Financial Derivatives

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