An Exponential-Affine Short Rate Bond Model Is One

question 11

Multiple Choice

An exponential-affine short rate bond model is one

• A)That most bond traders have an affinity for.
• B)Where the bond prices are linear in the short-rate.
• C)Where the logarithm of bond prices is linear in the short rate.
• D)Where the bond price is based on discrete compounding.

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Definitions:

Random Number Range

The interval within which random numbers can be generated, used in simulations and probabilistic models to represent unpredictable variables.

Monte Carlo Analysis

A computational algorithm that uses random sampling to obtain numerical results, typically used to solve problems that might be deterministic in principle.

Average Lead Time

The typical amount of time taken from the moment an order is placed until it is received, reflecting supply chain efficiency.

Poisson Distribution

A statistical distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space.