Question: Answer the below questions. (a) What is the empirical evidence on the relationship between volatility and the level of interest rates? (b) Explain whether the

Answer the below questions.
(a) What is the empirical evidence on the relationship between volatility and the level of interest rates?
(b) Explain whether the historical evidence supports the use of a normal model or a lognormal model.

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a Empirical evidence reviewed regarding the relationship between interestrate volatility and the level of rates suggests that the relationship is weak at interest rate levels below 10 However for rate... View full answer

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