In the Black-Derman-Toy (BDT) Model, Short Rates Have

question 9

Multiple Choice

In the Black-Derman-Toy (BDT) model, short rates have

• A) Constant volatility for all maturities.
• B) Volatility that changes by maturity of the short rate.
• C) Volatility that varies by maturity and level of the short rate, i.e., state-dependent volatility.
• D) Stochastic volatility.

---

Definitions:

Positive Neighborhood

An area characterized by factors that contribute to the well-being and quality of life of its residents, such as low crime rates, good schools, and strong community bonds.

Economic Order

A systematic arrangement or sequence of activities that define the structure and operation of an economy.

William Darity

is an American economist known for his research on inequality, education, and race, particularly in the context of the United States.

Black Men

A demographic descriptor referring to male individuals of African descent or having dark skin pigmentation.