Question: Answer the below questions. (a) Explain the drift property found in an interest-rate model. (b) Explain the volatility property found in an interest-rate model. (c)

Answer the below questions.
(a) Explain the drift property found in an interest-rate model.
(b) Explain the volatility property found in an interest-rate model.
(c) Explain the mean reversion property found in an interest-rate model.

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a The drift term refers to that variable in an interest rate model that captures the expected direction of the change in the interest rate eg a shortt... View full answer

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