In the CIR (1985) Model, Which of the Following Statements $r _ { t }$

question 18

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 \( { K }\) rises.
• C) The long-run mean rate \(\theta\) increases.
• D) The volatility \(\sigma\) increases.

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Definitions:

Ductile Behavior

Ductile behavior describes the ability of a material to deform under stress without breaking, often associated with rocks and metals that can bend or stretch under geological forces.

Brittle Deformation

The fracturing of rock under stress, without significant plastic deformation.

Metamorphism

The process by which the mineral composition and structure of a rock are changed by heat, pressure, or chemically active fluids.

Fluid Pressure

The pressure exerted by a fluid at rest or in motion, which can significantly affect geological structures and processes.