Question: Suppose that a = 0.1 and B 0.1 and = 0.15 in the Vasicek model. The initial short rate is 5% and the initial standard

Suppose that a = 0.1 and B 0.1 and = 0.15

Suppose that a = 0.1 and B 0.1 and = 0.15 in the Vasicek model. The initial short rate is 5% and the initial standard deviation of the short rate change in a short time At is 0.03 At. Calculate the prices of a zero- coupon bond that matures in year 7. Suppose that a = 0.1 and B 0.1 and = 0.15 in the Vasicek model. The initial short rate is 5% and the initial standard deviation of the short rate change in a short time At is 0.03 At. Calculate the prices of a zero- coupon bond that matures in year 7

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