Interest rate models capture the idea that we may know the of future shortterm risk-free rates, but we do not yet know which risk-free rate will actually be observed. number distribution total average Question 11 0/10 pts In the binomial model of interest rates, the probability of increases and decreases in rates must sum to 0 1 the risk-free rate 1/2 The slope of the yield curve increases when investors require a higher risk-premium for long-term bonds uncertainty about future risk-free rates increases the stock market goes up future risk-free rates are expected to decrease