In the CIR (1985)model,which of the Following Statements Is True $r _ { t }$

question 15

Multiple Choice

In the CIR (1985) model,which of the following statements is true? The price of the bond increases when

• A)The short rate \(r _ { t }\)
• Increases.
• B)The rate of mean reversion \(\boldsymbol { K }\)
• Rises.
• C)The long-run mean rate \(\theta\)
• Increases.
• D)The volatility \(\sigma\)
• Increases.

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Definitions:

Marginal Costs

The expense incurred from manufacturing an extra unit of a product or service.

Average Total Costs

The total costs (fixed and variable) of production divided by the quantity of output produced.

Average Fixed Costs

The total fixed costs divided by the quantity of output produced, indicating the cost per unit that does not change with output level.

Average Total Costs

The cost of producing each unit, calculated by dividing the entire production cost by the total number of units made.