What is the difference between equilibrium model and no-arbitrage model for short-interest rate?
Question
What is the difference between equilibrium model and no-arbitrage model for short-interest rate?
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Solution 1
The equilibrium model and the no-arbitrage model are two different approaches to modeling short-term interest rates in financial mathematics.
- Equilibrium Model: This model is based on economic theory and it assumes that the current state of the economy is in equilibrium. It tries to model the Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
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