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With regard to interest rate models: A. B C. D. Arbitrage Free Models A. B. C D. Equilibrium Models A. B. C. D. Mean Reversion

With regard to interest rate models:

A. B C. D.

Arbitrage Free Models

A. B. C D.

Equilibrium Models

A. B. C. D.

Mean Reversion

A. B. C. D .

Speed of Adjustment

A.

Dynamics of the term structure are developed using fundamental economic variables that are assumed to affect the interest rate process

B.

Velocity with which the short rate converges to the long run stable mean value

C.

An assumed long run stable mean value that the short term rate gravitates to over time

D.

Analysis begins with observed market prices for financial instruments known as benchmark instruments from which the term structure is assumed

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