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Suppose that the short rate, r, is 10% and its real-world process is dr = 0.25(0.07 r)dt + 0.045dz = while the risk-neutral process is

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Suppose that the short rate, r, is 10% and its real-world process is dr = 0.25(0.07 r)dt + 0.045dz = while the risk-neutral process is dr = 0.25(0.15 r)dt + 0.045dz 1) What is the market price of interest rate risk? 2) What is the expected return and volatility for a 3-year zero-coupon bond in the real neutral world

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