the the the final given by ar bond tes for or the ctively Use ropean es not erest Rate Derivatives: Models of the Short Rate 739 (c) tion is normal with a 0.01 and a 0.05 model (d) Option is American lognormal model with a 0.15 and a 0.05 31.28. Suppose that the (CIR) process for short-rate movement in the (traditional risk neutral world is a(b r) di and the market price of interest rate risk is (a) What is the real world process for r? (b) What is the expected return volatility for a 10-year bond in the risk neutral world? (c) What is the expected return and real world? and volatility from a 10-year bond in the