In the Cox-Ingersoll-Ross (CIR 1985) Model, You Are Given That $d r _ { t } = \kappa \left( \theta - r _ { t } \right) d t + \sigma \sqrt { r _ { t } } d W _ { t }$

question 16

Multiple Choice

In the Cox-Ingersoll-Ross (CIR 1985) model, you are given that $d r _ { t } = \kappa \left( \theta - r _ { t } \right) d t + \sigma \sqrt { r _ { t } } d W _ { t }$ where $x = 0.5$ , $\theta = 0.06$ , $\sigma = 0.10$ . If the yield of a five-year bond is $0.07$ , then what is the price of the bond?

• A) 0.65
• B) 0.70
• C) 0.75
• D) 0.80

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Definitions:

Psychographic Segmentation

The process of dividing a market into segments based on consumer psychology, including personalities, values, attitudes, interests, and lifestyles.

Predicting Consumer Behavior

The process of using various analytical methods and data to forecast future purchasing patterns and preferences of consumers.

Demographics

Information about the characteristics of human populations and segments, especially those used to identify consumer markets such as by age, gender, income, and education.

Demographic Segmentation

The division of a market into segments based on demographic factors like age, gender, income, education, or ethnicity to tailor marketing strategies.