In the Ho & Lee (1986) model, the parameter $\delta$ plays a crucial role. Which of the following statements best describes this parameter? A) $\delta 1$ . B) As $\delta$ increases the volatility of interest rates increases. C) As $\delta$ increases the volatility of interest rates decreases. D) $\delta

Question

In the Ho & Lee (1986) model, the parameter  $\delta$ plays a crucial role. Which of the following statements best describes this parameter?
A) $\delta > 1$ .
B) As $\delta$ increases the volatility of interest rates increases.
C) As $\delta$ increases the volatility of interest rates decreases.
D) $\delta < 0$ .

Quizplus · Accepted Answer

The Answer of In the Ho & Lee (1986) model, the parameter  $\delta$ plays a crucial role. Which of the following statements best describes this parameter?
A) $\delta > 1$ .
B) As $\delta$ increases the volatility of interest rates increases.
C) As $\delta$ increases the volatility of interest rates decreases.
D) $\delta < 0$ .

In the Ho & Lee (1986) Model, the Parameter δ\deltaδ Plays a Crucial Role

In the Ho & Lee (1986) Model, the Parameter $\delta$ Plays a Crucial Role